The new record was the highest level of trading volume among all derivatives products in the world surpassing the Euro-BUND Futures’ volume on EUREX of 151 million contracts during the year 2000. Moreover, the KOSPI 200 index options ranked first among all index options products for two consecutive years. The trading value based on premium rose to 16.6 trillion won, which was 95 percent increase from the last year’s value. Regarding daily trading volume, more than 3.1 million contracts were traded on December 6, marking the highest level for a single day. However, this record was soon replaced on January 11 of this year, reaching 3.2 million.
Entering the new millennium, the Korea Stock Exchange (KSE) has shown a remarkable performance in the options market. This development reflects escalating market volatility in the cash market as well as investors’ rising interest in the options market.
In order to accommodate increasing trading volume, the KSE plans to improve its market infrastructure including the introduction of a new trading system in February this year, capable of handling as many as 250,000 orders per day and the change of the margining by investment type such as hedge, spread, and speculative trading. These new measures will assist in maintaining market stability while attracting new investors.
The KSE also plans to list the options on individual stocks this year. This initiative will provide the retail investors with an efficient risk management instrument, while the index options are expected to be concentrated by the institutional investors with a long-term stake in the cash market.
