KRX hopes to lure foreign investors

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KRX hopes to lure foreign investors

Korea Exchange (KRX), the nation’s sole stock exchange operator, is making moves to attract foreign investment to revitalize its derivatives market.

“We hope to make KRX the Asian derivatives market’s hub,” said Choi Kyung-soo, chairman and CEO of the Seoul bourses’ operator, at Korea Exchange Derivatives Night, which was held in Singapore on Wednesday evening. “It is the perfect time to join the Korean derivatives market because the government and KRX are working to ease regulations and revitalize trading transactions.”

About 150 financiers from international investment banks, brokerage firms, asset management companies and hedge funds attended to hear how the market is being changed.

The Korean derivatives market used to be Asia’s largest in the early 2000s through 2011, but the market started shrinking sharply after local financial regulators tightened regulations to prevent excessive speculation following losses small investors faced after the global financial meltdown.

Such strong regulations succeeded in enhancing the market’s soundness, but resulted in a drying up of trading.

According to the KRX, the daily average trading volume of derivatives products reached 66.3 trillion won ($57.15 million) back in 2011. However, transactions kept declining to post 37.9 trillion won this year.

Hoping to regain past volumes and bring back foreign investors, the operator of the Seoul bourse said it has diversified the investment product pool and tried to implement global trading standards into its system.

It has listed its flagship index Mini Kospi 200’s futures and options, as well as yuan-linked futures and dividend futures, Choi explained. He also emphasized the bourse operator plans to allow foreign institutional investors - even if they are non-KRX members - to access the bourse and freely trade.

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