The Korea Herald


KRX to lose derivatives trading leadership

By 신현희

Published : Feb. 16, 2011 - 18:43

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The planned merger of Deutsche Boerse AG and NYSE Euronext is to likely to deprive the Korea Exchange of the status as the world’s most actively traded derivative market.

The KRX, the world’s No. 1 derivative market, took up 15.9 percent of the trade volume worldwide with about 1.78 billion transactions in the first half of 2010, the Futures Industry Association said.

The German-U.S. bourse alliance would top that, combining roughly 10 percent of the market share held by each. The two stock operators on Wednesday said they will merge, creating the world’s largest stock and derivatives operator.

Derivatives are investment products that track prices of underlying assets and are used to speculate or hedge future prices.

“KOSPI 200, the prime derivative product of the KRX, is the world’s most liquid derivative market with healthy combination of locals, foreigners and individuals and institutions,” Kim Young-bae at the derivative desk of the KRX told The Korea Herald.

KOSPI 200 Option is the world’s most popular equity index option which takes up a whopping 68.2 percent of total equity option transactions, according to the FIA.

“But KOSPI 200 may lose its foreign investors once China loosens rules for foreigners for the CSI 300, an equity index option,” he said.

Established in 2010 May, CSI 300 replicates the performance of 300 major stocks traded in the Shanghai and Shenzhen stock exchanges.

Three major alliances on the way representing more than 40 percent of the world’s traded stocks have spurred industry shake-up on a global scale, increasing competition for bourses.

Apart from the German-U.S. alliance, London Stock Exchange also announced it is bidding for Toronto Stock Exchange of Canada, valued at about $3.1 billion. Singapore is bidding to merge with Australia’s stock exchange for $7.8 billion.

By Cynthia J. Kim (