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KRX all out to revive derivatives market

South Korea’s stock operator Korea Exchange is determined to give a boost to its long-stalled derivatives market by reaching out to potential investors overseas.

This is also part of the KRX’s long-term plan to expand its overseas business after it was reprivatized in February after six years of government control.

“We may no longer sit back and blame (the government’s excessive) regulations for holding back our derivatives market,” said Kang Ki-won, director of the KRX derivatives market division.

“It is now up to the capacity of the KRX to lower the threshold for investors and to expand the market.”

Last week, the stock operator dispatched its officials to Australia, Singapore and Hong Kong to visit local financial organizations and hold one-on-one meetings to promote the KRX’s derivatives.

The key strategy was to offer each country and investor a differentiated trade deal that considered their financial demands, according to officials.

Korea’s derivatives market is largely represented by KOSPI200 futures and options, and also includes product derivatives such as oil, gold and carbon emission rights.

“Unlike stocks, derivatives are not very bound by the geographic location of the operating house, so potential investors are ready to go anywhere for an investment that is easily accessible and lucrative,” Kang said, stressing the importance of overseas marketing.

Korea’s derivatives market, which was once the world’s No. 1, recently slipped down to No. 11 due in part to the growth of rival countries such as China and India, according to officials.

Industry observers also pointed out that the years-long state control had deterred the stock operator from aggressive expansion.

It was in such a sense of crisis that the KRX kicked off an exclusive marketing department for the derivatives market earlier this year, shortly after privatization.

The KRX aims to become the world’s seventh-largest stock operator and to boost its derivatives market position from No. 11 to No. 5 by 2020. For this, it aims to launch 10 new derivatives within this year.

By Bae Hyun-jung (tellme@heraldcorp.com)
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