KRX to diversify derivatives trade
Korea Exchange, the operator of the world’s largest derivatives market, is initiating its first market-making scheme to provide liquidity to 10-year Korean Treasury bond futures.The scheme is to foster the Treasury bond futures, to be sold beginning later this month, as another signature derivatives product after the Kospi 200 option, Korea Exchange, also known as KRX, said.
The local bourse operator signed a contract yesterday with nine local futures product issuers designating them as market makers for the 10-year-treasury bond futures at the bourse operator’s headquarters in Yeouido, central Seoul.
A market maker provides buy-and-sell orders on a continual basis, thus increasing volume and improving liquidity in the derivatives market. In return, the companies, which include Tongyang Futures, Samsung Futures and Woori Futures, will be exempt from the transaction charges. The contract will be maintained for up to two years unless the companies withdraw, the bourse operator said.
“Some of the derivatives products we put on the market previously have not been actively traded because of a lack of liquidity in the early phase,” said Kim Sei-rang, a futures market manager at Korea Exchange. “We hope this market-making scheme will provide ample liquidity to the 10-year Treasury bond futures and thus cultivate them as our leading product.”
The Korea Exchange’s derivatives market is the world’s largest as of last year, in terms of daily trade volume and daily trade amount, Kim said. More than 11 million derivatives products worth 29.4 trillion won ($31.1 billion) were traded every day last year on the market.
Of the 12 products available, more than 95 percent of the daily trade was confined to the Kospi 200 option, Kim said. “The market-making scheme will contribute to the growth of our derivatives market by helping diversify products,” Kim said.
By Moon Gwang-lip Staff Reporter [joe@joongang.co.kr]
with the Korea JoongAng Daily
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