Korea Exchange

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Korea Exchange (KRX)
Image:Krx.png
Founded 2005
Headquarters Busan, S. Korea
Key People Chairman and CEO Bong-soo Kim
Products KRX KOSPI 200 Index derivatives

The Korea Exchange (KRX) was formed in 2005 from the merger of four domestic Korean exchanges, but has since grown rapidly. According to a recent Futures Industry Association survey, KRX was the world's leading derivatives exchange measured by trading volume in 2009 after placing third the previous year, and KRX recently established distribution agreements for its KRX KOSPI 200 Index products with its two leading competitors, Eurex and the CME Group.

Background

The KRX was formed on Jan. 27, 2005, from the merger of the Korea Stock Exchange (KSE), the Korea Futures Exchange (Kofex), the Kosdaq Market and the Kosdaq committee, part of the Korea Stock Dealers' Association. It provides an electronic platform for the trading, clearing and settlement of cash equities, bonds and derivatives. Ownership was split in 2007 between 44 financial and government entities, led by Woori Investment Securities (6.3 percent); Daewoo Securities (3.2 percent) and Daishin Securities (3.2 percent). Overseas owners include JP Morgan, Citigroup and Australia's Macquarie Bank.[1]

The Korea Exchange was the world's busiest in 2009, according to the annual Futures Industry Association's survey of the world's leading derivatives exchanges. [2] The FIA report, published in early April, 2010, notes that the number of futures and options traded on the Korea Exchange rose 8.3% on the 2008 figure to hit 3.101 billion, topping larger rivals Eurex and the CME Group. The Korea Exchange's Kospi 200 Options (KRX) also headed the FIA's list of the wold's top-20 equity index futures and options with 2.921 billion options traded, up 5.6% on the 2008 figure.

In mid-2009 KRX announced a program with the Laotian government to establish a stock exchange there in return for a 49 percent stake,[3] marking the third exchange in the Mekong region that the KRX had helped establish. Cambodia will begin construction on its first stock exchange in December of 2009, 49% of which will be held by KRX. The Cambodia exchange plans to launch with four or five companies issuing about $10 million worth of shares each.[4]. KRX has a similar agreement in Vietnam.

Korea Exchange reported in October 2009 that its most capitalized companies have seen their share prices rise by more than 50% since the beginning of 2009.[5] Stocks in the medical sector saw the highest growth at nearly 200% while telecom stocks fell nearly 10%.

Key products

The Korea Exchange's main benchmark stock index is the KRX KOSPI 200 and listed futures and options contracts tied to its value are the world's most-traded derivatives contracts, according to the Futures Industry Association.

Key people

On December 30, 2009, Bong-soo Kim became Chairman and CEO of the KRX after a two-month search for a new leader. Kim was the former president of Kiwoom Securities Company, one of the member firms of KRX, and took over as CEO of KRX after the sudden departure in October 2009 of previous KRX head Lee Jung-Hwan, [6] who had been at the top job for only eight months after joining the exchange in early 2005.[7]

Key contracts

The following contracts listed on KRX have MarketsWiki entries:

There are no restrictions on foreign individuals trading contracts listed on the KRX.

Joint Ventures

KRX recently expanded its position in the international derivatives market through partnerships with Eurex and the CME Group, to distribute and allow trading in options and futures respectively on its benchmark KRX KOSPI 200 stock index.

In November 2009 KRX launched a joint agreement with Chicago-based CME Group to provide after-hours electronic trading access to KOSPI 200 Futures contracts via the CME Globex platform.[8] KRX and the CME also agreed on a bi-directional order-routing system similar to that successfully implemented between the CME and BM&FBOVESPA, Brazil's largest securities-trading exchange. Phase one of the agreement between KRX and CME will give KRX clearing members access to the KRX KOSPI 200 Futures market via the KRX's Unifies System for Global Trading (USG) trading platform. Direct access to the market via CME Globex will be offered in later stages as regulatory approval is obtained.

KRX and Eurex announced in mid-July 2010 that from August 30 2010 the pair would trade and clear options on Korea’s blue-chip index KOSPI 200 on Eurex during European and North American trading hours. The two have also been preparing to launch daily futures contracts on KOSPI 200 Options on Eurex, part of the NYSE Euronext group, since the beginning of 2010.[9]. Fifteen KRX members and 16 Eurex members say they will be ready to trade the Eurex KOSPI Product during the course of 2010.[10] IMC and Archelon have signaled their interest to actively quote as market makers.

Latest News

KRX announced on July 28, 2010 that it would launch Korea's first-ever mini-sized derivatives contract, Mini Gold Futures, for trading on September 13 2010.[11] The trading unit for contracts will be 100 grams of 99.99% purity refined gold and final settlementprice will be determined based on the London Gold AM Fixing Price.

KRX expects the Mini Gold Futures contract will appeal as a risk management tool for smaller-scale manufacturers, wholesalers, retailers and retail investors in the precious metal. Officials at the Korea Exchange also expect the contract to provide greater greater transparency to the local gold-trading market and also drive demand among Korean investors for global gold-futures contracts.

References

  1. ↑ KRX 2006 Business Report. KRX. Retrieved on December 29, 2007.
  2. ↑ 2009 Annual Volume Survey. FIA magazine. Retrieved on April 8, 2010.
  3. ↑ S. Korea to help set up stock exchange in Laos. China Post. Retrieved on October 31, 2009.
  4. ↑ Construction of Cambodian bourse to begin in Dec. Forbes. Retrieved on November 3, 2009.
  5. ↑ Rising tide lifts leaders, runners-up. Joongang Daily. Retrieved on October 31, 2009.
  6. ↑ 'Too Many Bureaucrats in KRX'. Korea Times. Retrieved on October 31, 2009.
  7. ↑ Korea Exchange CEO Leads Through Downturn. Wall Street Journal. Retrieved on November 1, 2009.
  8. ↑ CME Group, KRX Announce After-hours Access to KOSPI 200 Futures on CME Globex. CME Group. Retrieved on July 28, 2010.
  9. ↑ Korea Exchange and Eurex Receive Strong Support from Major Market Participants for Their Link. Deutsche Borse Group. Retrieved on July 16, 2010.
  10. ↑ Korea Exchange and Eurex Receive Strong Support from Major Market Participants for Their Link. Deutsche Borse Group. Retrieved on July 16, 2010.
  11. ↑ Korea Exchange To List Mini Gold Futures On September 13, 2010. Exchange News Direct. Retrieved on July 29, 2010.

Resources

  • The Kospi Show. SFO Magazine. Retrieved on December 30, 2007.
  • Future Shock!. Korea Trade Investment Promotion Agency. Retrieved on December 31, 2007.

External links

Retrieved from "http://www.marketswiki.com/mwiki/Korea_Exchange"
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