FSC announced its roadmap for further development of Korea’s derivatives markets. When detailed initiatives of the roadmap go into effect, it is expected to foster qualitative growth of the markets. Below are the three main pillars of the plan.
1. Exchange-traded derivatives market will be developed into a risk-managed market with focus on professional investors through greater autonomy in the market and creation of new markets.
2. Over-the-counter derivatives market will be grown into a more transparent market with lower trading risk by phasing in central counterparty(CCP) and introducing trade repository(TR) systems.
3. Derivatives-linked securities market will be fostered into a sound investment market for retail investors by providing more diversified products and making it easier for investors compare and choose products.
Considering the current size of exchange-traded derivatives market, the FSC will actively introduce new derivatives markets such as V-KOSPI 200 futures, sector index futures and night time trading of US dollar futures. New markets are expected to provide professional investors with an instrument of risk hedging.
Measures will be taken to prevent retail investors from making reckless investments and thereby incurring huge financial losses in derivative markets. To such backdrop, the FSC will allow only “qualified” retail investors to newly enter derivatives markets.
Moreover, more active participation of professional investors will be encouraged. The FSC will allow banks to directly trade treasury bonds and currency derivatives on the KRX given that banks have expertise in transaction of treasury bonds and currencies, and sufficient experience of trading in OTC derivatives markets.
Three main initiatives and subordinate tasks are scheduled to be completed within the end of 2014.
Please read related press release for further details -> http://www.fsc.go.kr/downManager?bbsid=BBS0048&no=90978