- Background of the KRX Global Market
In order to create a trading environment operated 24 hours for KOSPI200 products, the KRX launched a nighttime market for KOSPI200 Futures traded via CME’s electronic trading system (Globex) in 2009 and also established a trading mechanism that links Eurex with Futures on KOSPI200 Options in 2010.
To manage the risks of exchange rate changes during the nighttime, the KRX opened a nighttime market for US Dollar Futures in the CME in December 2014. KRX listed the Euro Stoxx 50 Futures on June 27, 2016 for the purpose of promoting linkage markets, while offering domestic investors the opportunity to actively participate in the overseas financial product trading. KRX recently launched a Mini KOSPI200 Futures in the Eurex derivatives market on November 28, 2016.
Thanks to such globally linked trading, investors have been able to implement various investment strategies such as risk management and profit taking from trading overseas financial products during nighttime and the access of global investors to the Korea market has improved significantly.
- Comparison of the KRX Global Market (CME/Eurex)
- Comparison between CME-linked trading and Eurex-linked trading
CME-linked trading and Eurex-linked trading have different structures that fit their respective market and product features. The former refers to the continuous trading of KOSPI200 Futures and USD/KRW FX Futures during nighttime subsequent to the regular trading of daytime, indicating an extension of trading hours for KOSPI200 Futures and USD/KRW FX Futures. It is different from regular trading only because it uses CME Globex as a nighttime trading system. Therefore, the KRX regulation applies to the KOSPI200 futures nighttime market and USD/KRW FX Futures one and investment can be made only through the domestic member companies which participate in the nighttime market. Trading of KOSPI200 Futures and USD/KRW FX Futures is executed via Globex, but the KRX operates and oversees the KOSPI200 Futures nighttime market and USD/KRW FX Futures one because those are part of the KRX market.
However, Eurex-linked trading is a type of trading that is conducted after Eurex lists daily futures on the KOSPI200 Options and Mini KOSPI 200 Futures in the Eurex market. The product has a structure of “one-day maturity futures” to ensure that investor position upon the Eurex market closing is transferred to the KRX market, and the position transfer is conducted in the form of negotiated trading before the market opening. Thus, the Eurex regulation applies to the transaction and clearing of Eurex-linked trading, whereas the negotiated trading for final settlement before market opening is subject to the KRX regulation. Overseas investors are allowed to participate in trading in their own countries via Eurex members, while domestic investors via domestic securities/futures companies that have singed up for Eurex membership or have entered into a business contract with Eurex members.
< Comparison between CME-linked Trading and Eurex-linked Trading > (As of Dec, 2016) CME-linked Trading Eurex-linked Trading Market Structure Product - KOSPI200 Futures
- US dollar Futures (excluding spread)
- Futures on KOSPI200 Options with 1day expiration
- Futures on Mini KOSPI200 Futures with 1day expiration
Listing Type Same as in the regular market Listed as one-day maturity futures to have the same effect as options Link Method - CME : Trading/Execution
- KRX : Clearing/Settlement
- Eurex : Trading, Clearing/Settlement
- KRX : Pre-hours negotiated trading
Applicable Regulation KRX regulation Trading: Eurex regulation Final settlement: KRX regulation Trading Hours 18:00~05:00 of the following day (Korea time) - 18:00~05:00 of the following day (Korea time)
- 18:00~04:00 of the following day (when a daylight saving time of Europe applies)
Participating Members - Trading : KRX members
- Settlement : KRX members
- Trading : Eurex members
- Final settlement : KRX members
Market Participation Opening account with KRX members Opening account with Eurex members or domestic members that have entered into a business contract with Eurex members Others Trading Statistics Trading volume: Tallied by KRX - Trading volume : Tallied by Eurex
- Physical delivery : Tallied by KRX
Launch Date - Nov, 16, 2009 (KOSPI200 Options)
- Dec, 8, 2014 (US dollar Futures)
- Aug, 30, 2010 (KOSPI200 Options)
- Nov, 28, 2016 (Mini KOSPI200 Futures)
Number of Participating Members 35 member companies 23 member companies1) Denomination Korean Won Korean Won
- fn. 1)
- Based on the number of member companies which directly or indirectly participate in the Eurex market trading with regard to the linked transactions