Three additional securities firms have received authorisation to trade over-the-counter (OTC) derivatives in South Korea following regulatory changes last July that opened up the OTC derivatives market to the country's securities houses.Dongwon Securities, Hana Securities and Goodmorning Shinhan Securities all received licences to structure and market OTC derivatives last week, according to an official at the local regulatory body, the Financial Supervisory Commission (FSC). The three firms join Samsung Securities, LG Investment and Securities and Daewoo Securities, which obtained authorisation to trade OTC derivatives in October last year.
Previously, securities firms could only trade OTC derivatives as end-users. Under the new regulations, however, securities firms operating in the country can market OTC derivatives to corporate and selected institutional clients after receiving approval from the FSC.
The official added that Woori Securities had also applied for a licence but later withdrew its application after failing to meet internal control system and risk management requirements.
While the new business opportunity has been met with great enthusiasm, the current regulations do not allow securities firms to market derivatives products to retail investors. However, under the new Securities and Exchange Act – expected to come into effect next week - retail products such as equity-linked notes and warrants are expected to be classified as securities. This will mean that securities firms with OTC derivatives licences will be able to market these newly classified securities to the country’s retail investors.
More on Structured Products
UK office adds Bhavick Patel while Alain Kunz joins in Switzerland
Societe Generale triumphs in a year of two halves
Fallout from SNB decision dominates structuring
New payoffs and underlyings enhance yield opportunities
Sign up for Risk.net email alerts
Sanjay Sharma talks about risk transparency and how his book helps achieve it.
A five-minute formula from Alexander Denev that takes you through a simple probabilistic graphical model and explains how and why these are used. Find out more about the ground-breaking book, Probabilistic...
Industry leader Vincent Kaminski discusses the challenges faced by energy markets and his new book, Managing Energy Price Risk, 4th Edition.
Momtchil Pojarliev talks about his book, The Role of Currency in Institutional Portolios, currency investing and the potential role of currencies in institutional portfolios.
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.