Korea's Kookmin Bank to launch equity derivatives desk

Anticipating an increase in South Korean equity derivatives activity, Korea's Kookmin Bank is looking to establish a dedicated equity derivatives desk by the end of the year, said Nicholas O'Kane, Kookmin's Seoul-based business head for derivatives and structured products.

Kookmin officials believe Korea's upcoming regulatory changes - which will open up the over-the-counter (OTC) derivatives market to securities firms - will help boost equity derivatives trading in Korea.

"We anticipate that with the regulatory changes relating to securities firms and derivatives, there will be an increased amount of activity in the equity derivatives market," O'Kane said. "Eventually, we are expecting a similar growth pattern to that we have seen in treasury derivatives."

Korea's regulatory changes, due on July 1, will allow securities firms operating in the country to freely trade OTC derivatives, including equity derivatives, after receiving approval from the local watchdog, the Financial Supervisory Commission (FSC). Currently, securities houses can only use OTC derivatives as end-users, said an official at the FSC.

By the end of the third quarter Kookmin hopes to have a 13-strong team working specifically on equity derivatives. The team will focus on products such as warrants, options over single issues and structured products such as equity-linked notes.

The bank has yet to name a head for the desk.