Trading the Kospi

Discussion in 'Index Futures' started by rockbrain, Sep 16, 2003.

  1. Does anyone know of any firms in the US, that trade the Kospi? Does IB allow kospi trading? If not why? Someone told me that you cannot trade the Kospi thru a US based firm, this doesn't sound like a valid reason.
     
  2. JayS

    JayS

    I think the Kospi is not CFTC approved so US residents can't trade it.
     
  3. What abut the Ferengi exchanges?
     
  4. Latinum futures....whats the near month again? LU/Z3? :D
     
  5. JayS

    JayS

  6. Steve_IB

    Steve_IB Interactive Brokers

    IB has recently launched Japanese futures and options, and Korea is the next Asian country on our hit list. We hope to offer the futures and the options.

    However, these products are not CFTC approved and thus we will not be able to offer them to US individuals.

    I guess with daily volume of 10million contracts on the KOSPI futures and options, the KSE doesn't care too much about CFTC approval?!
     

  7. "US individuals" should read "US residents." It is an odd but important distinction, and dem be da facts.

    I'll repeat some advice from another thread: For all the US-based traders who will not be trading Kospi options due to CFTC restrictions: Move overseas!
     
  8. kc11415

    kc11415

    Steve_IB> However, these products are not CFTC approved and thus we will not be able to offer them to US individuals. I guess with daily volume of 10million contracts on the KOSPI futures and options, the KSE doesn't care too much about CFTC approval?!

    Since this thread, there have been big changes in the Korean derivatives markets, and much more to come.

    http://www.tradersource.net/TheKospiShow.pdf
    Article from SFO Magazine, October 2003
    The Kospi Show: South Koreans Uncage the Tiger
    "An American Debut?"
    "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."

    If you go to the English portion of the KOFEX web site:
    http://www.kofex.co.kr/english/index.html
    You will be able to find reports such as:


    (2003-12-26) KOSPI 200 Futures and Options To Be Traded on KOFEX from Jan. 2, 2004



    2003-12-29 19 Securities Firms Approved As New Special Members

    1.GS 3.DB 5.LB 6.ML 7.MS 10.Citi 11.SG 12.ABN_AMRO 13.UBS 14.JPM 18.CSFB

    ----------------------------------------------
    The CFTC restriction may currently preclude KOFEX and its member brokers from soliciting or transacting business within US jurisdiction with US retail consumers. (I believe institutionals with overseas offices may have ways around these restrictions)
    However, what is to stop a US resident from calling a brokerage in Seoul and opening a Korean-domiciled account? There is a procedure for foreign investors to register with something called a Standing Proxy which like registering with a bank, which then acts as some sort of financial intermediary and as some sort of co-signer(?) for you to open a trading account with a brokerage account. After that, you can use an online trading app to place orders. Sample explanations of this include:
    http://www.tyfutures.co.kr/eng/new_account/account.jsp
    http://www.kookminfutures.co.kr/kbf_eng/guide/account.html
    http://www.nfutures.co.kr/images/eng_openning_img.gif
    (The listing of these examples is not a recommendation.)

    For a list of brokerage members of the KOFEX, see:
    http://www.kofex.co.kr/english/mem/mem_member.asp
    From there, you can access URL's for each broker's web site, and then look for the inevitable link for English translations of the key pages.
     
  9. Steve_IB

    Steve_IB Interactive Brokers

    Thanks for that. Quite useful. The whole issue of switching the KOSPI from KSE to KOFEX has become very political, so I'm not sure how long the wrangling is going to take.

    I'm not sure if you'd be eligible to get the standing proxy and trade through a Korean brokerage (?)
     
  10. So wait, can we trade the Kospi in US ??
     
    #10     Jan 22, 2004