During the 3 years since the launch of KOSPI 200 Options Market, the KSE has made a remarkable growth in liquidity and dramatic increase in trading volume. Since last year the KOSPI 200 Options Market has become the world's leading options market in terms of trading volume. Compared to the average daily trading volume of 31,890 contracts in 1997, that figure has skyrocketed to 510,637 contracts in the first half of this year, 1501 percent higher than in 1997, which is in fact the highest record among all the option products traded at the exchanges around the world. Among all derivatives products traded at the exchanges including futures contracts, the KOSPI 200 Options Market has ranked the third in terms of the cumulative trading volume during the first five months of this year, up from the fourth during the corresponding months of last year, following the Euro-BUND Futures at the EUREX and the 3 Month Eurodollar Futures of the CME. This year it has surpassed the trading volume of the U.S. T-Bonds Futures contract at the CBOT.
By investor type, over 60 percent of trading come from individuals. This rate has been slightly decreased since 1999. In contrast, the proportion of foreign investors has risen to 8.7 percent this year from 3.7 percent in 1999, mainly due to their heavy trading of options for hedging and arbitrage trading purpose. As trading activity in underlying stock market by foreign investors is increased, the participation of foreigners in the options market is expected to be on the rise.
The KSE commenced the trading of the KOSPI 200 Index Futures in 1996 and opened the KOSPI 200 Index Options Market in 1997. Both of them were traded by the electronic trading system. Their underlying assets are the Korea Stock Price Index 200. The daily trading volume in the KOSPI 200 Index Futures had recorded 63,443 contracts in the first half of this year.
