According to the relevant law (see page 2 for details), KOSPI 200 futures and options will be transferred from KSE and traded on KOFEX from January 2, 2004(January 1 is a holiday in Korea). In order to ensure smooth operation of the KOSPI 200 market, KOFEX launched KOSPI 200 Market Operation Team and KOSPI 200 Market Management Team and a total of 22 staff will be assigned from KSE to be responsible for the management of the two new teams. In addition, KOFEX set up the Customer Service Team to meet the ever-growing needs of our customers in a more efficient and timely manner.
In November 2003, average daily volume of KOSPI 200 futures was 237,795 contracts and that of KOSPI 200 options stood at 13,126,970 contracts.
2. System
KOFEX is currently using OM's CLICK and SECUR and will continue to use the same system for all its contracts, except KOSPI 200 contracts.
For the KOSPI 200 contracts, the current KSE system which was developed by Korea Securities Computer Corp.(KOSCOM), will continue to be used. Therefore, KOFEX will be operating two systems for the time being.
3. Data Service
Trading data on KOSPI 200 contracts will be jointly owned by KOFEX and KSE during 2004 as the two exchanges share the ownership of the contracts during the year. KOFEX will be the sole owner of the products from 2005 on.
During the joint ownership period, KSE and KOFEX plan to entrust KOSCOM to serve as the data service center. KOSCOM will be the only data provider for KOSPI 200 contracts during 2004.
4. Membership
Currently, KOFEX has 10 clearing members (FCMs), 2 non-clearing members(FCMs), and 26 non-clearing special members(securities firms). In connection with the shift of KOSPI 200 contracts, a total of 20 securities have applied for special membership to KOFEX and they are expected to be admitted on December 29, 2003. The new members will be allowed to trade only KOSPI 200 contracts. On the other hand, our existing special members who are currently trading only KOSDAQ 50 contracts, will be able to trade KOSPI 200 contracts without any additional capital contribution, in addition to KOSDAQ 50 products. As a result, KOFEX will have 58 membership by the end of the year. The new members include ABN Amro, CSFB, Goldman Sachs, Merrill Lynch, Morgan Stanley, JP Morgan, etc, and they are currently trading KOSPI 200 products on KSE.
5. History of Korea's Derivatives Market
The Futures Trading Act passed in December 1995 stipulates that all derivatives contracts shall be traded only on a futures exchange.
As there was no futures exchange back then, the Securities Exchange Act was revised to regard KOSPI 200 contracts as securities and allow the Korea Stock Exchange(KSE) to list KOSPI 200 futures and options, in May 1996 and July 1997, respectively.
In April 1999, the Korea Futures Exchange(KOFEX) was launched and began trading 4 contracts, USD futures and options, Gold futures and CD Interest Rate futures
In December 29, 2000, The Enforcement Decree to the Futures Trading Act was revised to stipulate that KOSPI 200 contracts shall no longer be regarded as securities, effective on January 1, 2004. Therefore, all derivatives contracts shall be traded only on a futures exchange.
