Korea Futures Exchange Posts 12.95 Million Contracts In Total 2003 Annual Trading Volume

The Korea Futures Exchange(KOFEX) posted almost 12.95 million contracts in total 2003 trading volume or 52,242 contracts per day, down 11.4% compared to the previous year when 14.62 million contracts were traded, an average of 59,932 contracts per day.

3-year KTB futures, KOFEX's key contract, suffered a 20.8% decrease year-on-year due to a weak cash market. Its daily average volume stood at 52,369 contracts. However, the trading volume of US dollar futures rose 4.0% and KOSDAQ50 futures also increased 90.5%. MSB Interest Rate futures, which was rolled out in December 2002, posted a whopping 654% growth in 2003 due to an incentive program.

Institutional investors continued to lead the market with a 82.9% share and notably, foreigners' market share increased from 5.2% in 2002 to 7.8% in 2003. Of the institutional investors, banks were the most active players with a 29.7% share, followed by futures companies with 22.5% and investment trust companies with 16.4%. Individual investors accounted for 8.0% of the total trading volume, down from 9.5% in 2002.

In addition to the strong trading volume, KOFEX embarked on a number of significant initiatives throughout the year. On top of the agenda was the smooth transfer of KOSPI 200 futures and options from the Korea Stock Exchange to KOFEX. The two exchanges signed the final contract on the transfer in June 2003 and jointly held a mock trading session in October 2003 to test the systems for trading of the KOSPI 200 contracts on KOFEX.

Ahead of the significant shift on January 2, 2004, of the world's most actively-traded contracts, KOFEX concentrated its efforts on improving market accessibility for foreign participants, particularly in the United States. The efforts include our plan to have Korea Treasury Bonds designated as exempted securities and to apply for a no-action letter for KOSPI 200.

On August 22, 2003, KOFEX launched 5-year KTB futures and completed a line-up that effectively corresponds to the term structure of various interest rates. Further, the Integrated Market Surveillance System was put in place from January 2003 and the new system will further improve market integrity and ensure stronger investor protection.

In connection with the transfer of KOSPI 200 contracts which started trading on January 2, 2004 on KOFEX, a total of 19 securities firms joined KOFEX membership at the end of 2003.