Eurex/KRX KOSPI 200 Cooperation Achieves Milestone on its First Anniversary
Eurex and KRX announced impressive figures about the volume development and the tight spreads of the Eurex KOSPI Product over the last twelve months at a joint press briefing in Seoul September 5. Since its launch on 30 August 2010, the Eurex KOSPI Product has steadily increased its daily average volume – peaking at a record level of 108,000 contracts in August 2011 – the first month with ADV above 100,000 contracts. Additionally, a daily record was achieved on 4 August 2011 with 207,953 contracts.
Bid-ask spreads for the Eurex KOSPI Product have become very narrow due to the liquidity provision of two market makers.
Volumes are expected to rise further as KRX and Eurex continue to develop the after-hours market for the world’s most widely traded derivatives contract. The number of active end-customers as well as participating Eurex and KRX members continues to expand. At the launch, 12 KRX and Eurex members were able to trade the Eurex KOSPI Product, today the number has increased to 21. There are 9 additional KRX and Eurex members who are currently preparing to participate in the Eurex/KRX Link.
“Our Eurex KOSPI Product has successfully established itself in the market within one year, exceeding our initial expectations,” said Michael Peters, Eurex Executive Board member. “This is due to our close partnership with the Korea Exchange, our joint customer consultation and the innovative offering we have jointly created. Our participants do not only trade via the order book but also use our block trading functionality, which allows members to place OTC transactions directly and efficiently into the Eurex clearing system.”
Jin-Gyu Kim, KRX president & COO said: “The Eurex KOSPI Product has become an efficient risk management tool for global investors participating in the Korean market. As a result, this innovative product is seen as one of the most successful offerings introduced in the framework of exchange and clearing house co-operations. KRX will continue to improve the market quantitatively as well as qualitatively”.
The Eurex KOSPI Product is a daily futures contract based on the KOSPI 200 options available on the Korea Exchange. The futures contracts expire at the end of each trading day and any open positions are transferred to KRX to establish a position in the KOSPI 200 option. This product cooperation between Eurex and KRX enables market participants to trade KOSPI 200 options during European and North American trading hours.