On Monday September 5, 2011 the Korea Exchange and the Deutsche Bourse’s Eurex segment celebrated the one year anniversary of the latter exchanges listing of the KOSPI 200 Index Option with a Gala dinner in Seoul, Korea. The dinner held at The Shilla Hotel was attended by Michael Peters of Eurex’s Executive Board and Jin-Gyu Kim President and COO of the Korea exchange among a wide array of Korean brokers and buy side members.
The contract began trading August 30, 2010 which saw just 24 contracts changing hands. One year later, however, volume for August 2011 ballooned to a staggering 2.48 million contracts or more than 107,000 per day on average. There was a one day high on August 4 of 207,000 contracts. As you can see by the graph volume initially grew slowly and it was not until May 2011 that the contract began to take off breaching the 1 million contract mark since launch.
The contract initially started with 12 participant and has now grown to 21 with 2 market makers (IMC and Archelon) and Korea's largest online retail broker pushing volume and attracting interest in this T+1 traded contract. Eurex is responsible for the execution and clearing while KRX is charged with risk and settlement.
The KOSPI 200 Index option is the world’s largest stock index derivatives contract in terms of volume and, according to the World Federation of Exchanges, the product saw turnover of 3.53 billion contracts changing hands in 2010. (2nd is National Stock Exchange of India, 3rd is Eurex). Eurex saw an opportunity to tap into and expand liquidity in this product during European and North American hours offering market participants trading and hedging opportunities that were previously unavailable. Trading hours are 09:00 to 21:00 CET (or 10:00 if its daylight savings time in Europe) which works quite well as the Korea markets closes at 09:15 CET so in effect this contract is available for 20 hours per day.
Eurex's product trades as a futures-style, Korean Won-settled option that expires daily where clearing and trading fees are 4bps on the premium paid. Thus, the further in the money the option is or the greater the volatility the more fees the exchange earn. It is not surprising that record volume was achieved last month in the wake of the United States credit rating downgrade which saw volatility jump to a 2 year high of 70.33.
The Bombay Stock Exchange’s SENSEX 30 index future also trades on Eurex and the Singapore Exchange has listed the STOXX 50 Index future.
With reference to trading KOSPI 200 future during regular KRX hours (09h00 – 15h00 Seoul time) can anyone point me in the direction of a list of Korea-based brokers offering direct maket access to KRX?
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With reference to trading KOSPI 200 future during regular KRX hours (09h00 – 15h00 Seoul time) can anyone point me in the direction of a list of Korea-based brokers offering direct maket access to KRX?
Many thanks.