Kospi 200 option to be listed on U.S., German bourses

Discussion in 'Index Futures' started by RedDuke, Aug 3, 2007.

  1. RedDuke


    I just read it on KRX. It seems that US traders will soon get an access to KOSPI index trading. It is about time, as it is one of the most liquid in the world. However, I am a bit confused if this move, will allow US traders to also trade on KRX, since this is where the liquidity is. Anyone has any clue?

    Kospi 200 option to be listed on U.S., German bourses

    The Kospi 200 option will be listed on the U.S. and German bourses in the second half of this year at the earliest. The method of listing is still being discussed, but a linked listing is most likely.

    However, even if it is listed through a linked listing, or, for that matter, a direct listing, most loyalty and fees will be paid to the Korea Exchange, leaving little left for allocation to Korean brokerage houses. The impact from the foreign listing on the local market will be small, if any, experts say.

    According to securities market sources, bourses in the U.S. and Europe are discussing ways to list Korean stock index futures and options in their countries with the Korea Exchange.

    In particular, discussion over this matter is picking up speed after officials from the U.S. and Europe visited Korea and held talks with the Korea Exchange during the international derivatives securities conference, which was hosted by the Korea Exchange on July 12.

    The Kospi 200 option is the most likely product to be listed overseas. It accounted for 73 percent of the aggregate volume of index options trading globally last year, and 20.4 percent of derivative products trading in the world. This indicates it has consolidated its leadership position among option products trading worldwide. As such, foreign securities markets have recognized its commercial value, with several bourses having already taken steps to introduce the Kospi 200 options to their markets.

    As for candidate bourses to list it, the Chicago Mercantile Exchange in the U.S. and EURONEXT are being considered.
  2. RedDuke


    Anyone heard or knows anything about this?
  3. hsmc1970


    Here is something I received on the issue

    "Americans cannot trade Kospi futures or options. Currently, they are a Commodity Futures Trading Commission (CFTC)-restricted item. The process for becoming approved must begin with the exchange offering the contract actually making a request to the CFTC for “No-Action Relief in Connection with the Offer and Sale of its Futures Contract …in the United States.”

    According to Dr. Sung-Hee Hong, a senior vice president at the Korea Stock Exchange (KSE), “The KSE has every intention of petitioning for no-action relief to allow the trading of the Kospi futures and options contracts in the U.S., but questions about whether the KSE or the KOFEX (Korea Futures Exchange) would house the contracts have led to the delay in petitioning. Once the contract is transferred to the KOFEX next year, we will move forward with the petition.” Of the 60 foreign products currently approved for trading by the CFTC, none are from the KSE or the KOFEX.

    Dennis Holden, a spokesperson for the general counsel of the CFTC, reassures that, “Once a completed petition is received, the CFTC moves expeditiously to process the request.” There are no statutory time requirements, so it is possible that the Kospi products will be on the CFTC’s approved list by some time next year.

    So, the question is, once approved for trading in the U.S., will the Kospi futures and options products be accepted and put on a show away from their shores? Much of that will depend on how familiar the name Kospi becomes and how traders respond to a smaller-sized contract from a country about which they may know little. Nonetheless, a smaller-sized contract and adjoining smaller margins may be a fetching idea as U.S. indexes increase in value. After all, many people chuckled out loud when they learned that the Chicago Mercantile Exchange was launching a mini-sized S&P futures contract to butt up against the Chicago Board of Trade’s Dow futures contract, the blue-chip leader. And no one’s laughing now. The Kospi could be one of those little-known products that has the size and liquidity to make it a hit"
  4. RedDuke


    Thanks for this update. Let's hope that it will happen.
  5. hsmc1970


    From looking at the data I think it will be excellent to trade.

    If I get any updates I will let you know
  6. Any word on the KOSPI options being available to U.S. residents?
  7. 20% of listed derivatives volume?!
  8. l12


    any news on this?

    Trading just the futures stinks! (leverage)

    Apparently Topix will come to NYSE liffe and may be something later this year.. but for now I don't see any good trading in Asian times, do you?

    I have not tried Japanese Nikkei or Topix, only SGX and CME versions..

    Are the Japanese ones good? (a la DAX/SMI at least)

    Also haven't tried CAC, why no one trades that? Heard it has even higher volume than ESTX and DAX.. at least it did a couple of years ago.