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Gov't to boost derivatives trading

Financial Services Commission Chairman Choi Jong-ku
Financial Services Commission Chairman Choi Jong-ku

By Kim Bo-eun

The government pledged Thursday to boost derivatives trading by relaxing some of its regulations governing futures and options investments within this year.

"Regulations are hindering the entry of individual investors into the market, as well as institutional investors," Financial Services Commission (FSC) Chairman Choi Jong-ku said at the Korea Exchange in Busan.

"The aim is to stimulate the capital market by removing some regulations, improving the trading system and introducing new derivatives products."

The chief of the financial regulator unveiled these plans at a discussion held on developing derivatives, attended by key officials of the FSC, the Korea Exchange, the Korea Financial Investment Association and executives of securities companies.

A series of regulations have led to investors leaving the local market, resulting in a decline in derivatives trading.

Individuals are instead turning to cryptocurrencies and overseas derivatives due to high entry barriers in the domestic derivatives market, FSC Chairman Choi said.

The daily average trading value of individual investors fell from 17 trillion won in 2011 to 6.1 trillion won in 2018. The daily average trading value of institutional investors decreased from 32.2 trillion won in 2011 to 16.2 trillion won in 2018.

The scale of exchange-traded derivatives here is growing but still insignificant in comparison to the global market. Foreign investors have called for inconveniences in the current system to be improved.

Officials agreed unnecessary regulations and a concentration on certain products were some key areas in need of improvement.

Global derivatives exchanges manage risks through a margin deposit, but here individual investors are required to make a dual deposit worth tens of millions of won to be able to trade.

Current regulations require a retail investor to deposit a minimum of 30 million won to buy futures or options and 50 million won to sell options.

Choi said the government would ease the rules on deposits and allow brokerages to make the decision on whether investors would be able to trade, based on their credit and other factors.

Another barrier is the required training courses for investors to be able to trade. They are required to take 20 hours of courses as well experience 50 hours of mock trading.

The FSC chairman said the government plans to cut down unnecessary training courses by the end of the year.

Meanwhile, there is a heavy concentration of products tracking the KOSPI 200.

Choi stated the government would seek to facilitate the development of new products and improve the listing system.

As of the end of 2018, 40 derivatives products were traded on the exchange.


Financial Services Commission Chairman Choi Jong-ku
Financial Services Commission Chairman Choi Jong-ku

By Kim Bo-eun

The government pledged Thursday to boost derivatives trading by relaxing some of its regulations governing futures and options investments within this year.

"Regulations are hindering the entry of individual investors into the market, as well as institutional investors," Financial Services Commission (FSC) Chairman Choi Jong-ku said at the Korea Exchange in Busan.

"The aim is to stimulate the capital market by removing some regulations, improving the trading system and introducing new derivatives products."

The chief of the financial regulator unveiled these plans at a discussion held on developing derivatives, attended by key officials of the FSC, the Korea Exchange, the Korea Financial Investment Association and executives of securities companies.

A series of regulations have led to investors leaving the local market, resulting in a decline in derivatives trading.

Individuals are instead turning to cryptocurrencies and overseas derivatives due to high entry barriers in the domestic derivatives market, FSC Chairman Choi said.

The daily average trading value of individual investors fell from 17 trillion won in 2011 to 6.1 trillion won in 2018. The daily average trading value of institutional investors decreased from 32.2 trillion won in 2011 to 16.2 trillion won in 2018.

The scale of exchange-traded derivatives here is growing but still insignificant in comparison to the global market. Foreign investors have called for inconveniences in the current system to be improved.

Officials agreed unnecessary regulations and a concentration on certain products were some key areas in need of improvement.

Global derivatives exchanges manage risks through a margin deposit, but here individual investors are required to make a dual deposit worth tens of millions of won to be able to trade.

Current regulations require a retail investor to deposit a minimum of 30 million won to buy futures or options and 50 million won to sell options.

Choi said the government would ease the rules on deposits and allow brokerages to make the decision on whether investors would be able to trade, based on their credit and other factors.

Another barrier is the required training courses for investors to be able to trade. They are required to take 20 hours of courses as well experience 50 hours of mock trading.

The FSC chairman said the government plans to cut down unnecessary training courses by the end of the year.

Meanwhile, there is a heavy concentration of products tracking the KOSPI 200.

Choi stated the government would seek to facilitate the development of new products and improve the listing system.

As of the end of 2018, 40 derivatives products were traded on the exchange.


Kim Bo-eun bkim@koreatimes.co.kr

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