Korea’s securities regulator, the Financial Services Commission (FSC), has issued plans for the development of South Korea’s derivatives markets.
South Korea is subject to G20 rules on OTC derivatives markets and the country has been working gradually towards compliance.
There are only fifteen exchange-traded derivatives products traded on the Korean Exchange (KRX), compared to 1303 products on CME, 274 on Eurex and 100 in Japan.
The FSC says it will develop new markets and products, pointing to plans to introduce V-KOSPI 200 futures, sector index futures and night time trading of US dollar futures.
Derivatives markets handled by the KRX will be granted greater autonomy by the regulator, under the condition that activities will not undermine the stable operation of the markets and investor protection.
There will also be a two-stage programme to permit retail investors to trade certain futures and options and the expanded participation of professional investors, allowing banks to directly trade treasury bond and currency derivatives on the KRX, including US dollar futures and twenty year treasury bond futures.
Korea’s central counterparty (CCP) for OTC derivatives was established in 2013. Starting from 30 June 2014, qualified won-denominated interest rate swaps will be cleared through this CCP. The scope of derivatives contracts cleared there will be expanded shortly. A trade repository system will also be introduced in accordance with G20 standards.