Derivatives trading up in Korea

The notional amount of derivatives traded in Korea last year grew by 43.6% to KRW38,427 trillion ($40.5 trillion), according to data released by Korea’s financial regulator, the Financial Supervisory Service (FSS),

Exchange-traded derivatives amounted to KRW34,417 trillion, dwarfing volumes traded over-the-counter, which stood at KRW4,010 trillion. The FSS said a large increase in stock index options trading driven by a surge in share prices boosted the trading of exchange derivatives in 2005.

Interest rate swaps traded over-the-counter, largely by foreign hedge funds, pushed the interest rate swap figures up to KRW726 trillion from KRW474 trillion a year earlier. Exchange-traded Korean Treasury bond futures amounted to KRW17 trillion at year end 2005.

According to the FSS, securities companies were the most active derivatives traders, with turnovers on their part topping KRW32,294 trillion, 84.1% of the total turnover.

Credit derivatives contracts outstanding at year-end came to KRW2.5 trillion, only 0.14% of the total derivatives contracts outstanding.