KRX unveils new measures for boosting derivative market

The Korea Exchange said it would introduce two new safety measures to revert mistaken deals in the derivative market in hopes of encouraging potential traders and boosting exchange.

Under the first measure, the state-run stock operator will reject orders placed at prices excessively higher or lower than average contract orders starting in September, officials said Thursday. The specific percentage range will depend on the nature of the deals.

The new regulation will be applied to KOSPI 200 futures, KOSPI 200 options, stock futures, three-year bond futures, 10-year bond futures, dollar futures, euro futures and yen futures, officials said.

Should a buyer bid at a price exceeding the designated range, the bidding price would be automatically converted based on real-time price limits.

Under the second measure, the office will be authorized to adjust mass deals worth 10 billion won ($9.8 million) or more that were based on errors without having to attain the consent of other parties in the transaction. The side requesting the correction, however, must meet the rules and conditions set by the KRX. The action must also be deemed absolutely necessary for a market order, officials said.

The operator’s latest plans were in response to the Financial Services Commission’s earlier calls for the financial industry to help promote the domestic derivative market and diversify investors’ business portfolios.

“Our goal is to enhance the leverage of the derivative market and to develop it into a risk management market that would be more attractive to professional investors,” said a KRX official.

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