Korea Exchange (KRX) has introduced mandatory clearing of Korean won-denominated interest rate swaps between financial investment companies.
The KRX was authorised as a central counterparty (CCP) for the clearing of OTC derivatives in September 2013.
In accordance with G20 agreements, the Korean government put in place CCP-related regulations in April 2013. It said that it has decided to enforce mandatory CCP clearing for Korean won interest rate swap transactions in the light of international recommendations and the domestic market environment.
KRX has been providing a free of charge clearing service for its member financial investment companies since March 2014. A dozen banks and 23 securities firms participated in that voluntary CCP clearing service and have cleared 427 transactions. Domestic branches of foreign banks had previously not been permitted to participate in Korean CCP clearing. That has now changed and the KRX and the securities regulator are encouraging foreign branches of banks to actively trade Korean won interest rate swaps and to participate in the CCP system.