Published On: Sun, Nov 8th, 2009

KRX Continues Its T+1 Ambitions

We recently wrote about T+1 Sessions in Asia and noted that the Eurex Group would be listing the Korea Stock Price Index 200 (KOSPI200) options on its Eurex platform. The Korea Exchange (KRX) in an attempt to attract even more liquidity has engaged CME Globex to begin trading T+1 KOSPI Index futures starting November 16, 2009.

There is no difference between the future contract trading in Korea and the one that will trade on Globex but there are a few caveats in this phase 1 launch. For example, trading will initially only be available to KRX clearing member firms via the Unified System for Global trading (USG) platform; a KRX member platform. Subsequent phases will eventually allow trading on Globex’s and third party trading platforms. Also, no Give-up trades are allowed with the KOSPI200 futures (or any other futures product for that matter) whether in the T or T+1 session.

If you wish to trade KOSPI 200 T+1 you must have an independent non-omnibus clearing account with a KRX clearing firm. It is also recommended that as a foreign investor you select a custodian bank. The custodian bank will help you to open an account with a KRX member firm and with a bank offering foreign exchange services. Trades must be settled in Korean Won but other collateral such as US Dollars may be used as margin. The custodian bank will act on your behalf exacting deposits, withdraws and transferring funds as needed.

During the first phase any collateral posted at CME Clearing will not be eligible to satisfy margin requirements for the KOSPI 200 futures and SPAN margining will not apply. Instead KRX’s own COMS margining system will be used. In laymen terms margin will need to be posted at both the CME and KRX separately which is prohibitive to small trading firms but a large futures broker may help you help with financing these trades.

KOSPI 200 Futures will only clear and settle once per day aggregating both the regular session and the T+1 session trades of the previous day into one settlement process.

All KRX member firms who wish to take advantage of the T+1 session will need to migrate from existing KRX access to the Unified System for Global trading. Not all have or will migrate but if you want to take advantage of trading the KOSPI Index future in the T+1 session we an help you find a KRX clearing firm here in Asia.

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