By Choi Kyong-ae
The financial regulator is looking into the derivatives transactions of four foreign banks which have jumped abnormally since last year, officials said Tuesday.
"The Bank of Korea (BOK) asked the Financial Supervisory Service (FSS) to jointly look into the banks to see if they are involved in any activities that could worsen uncertainties in the financial market ahead of the planned U.S. interest rate increase," said FSS official Um Il-yong.
Transactions of financial derivatives products such as futures, options and forward contracts have been on a gradual decline since last year on the local financial market.
In contrast, the derivatives transactions at Seoul branches of the four banks — BNP Paribas, J.P. Morgan Chase & Co., Deutsche Bank and Credit Suisse — have sharply increased since last year, the FSS said.
"As the BOK closely monitors flows of capital and is responsible for monetary policy, it requested that the FSS join in the investigation," the FSS official said.
The BOK confirmed the probe is underway and it is about derivatives; but refused to elaborate.
With uncertainties growing amid a possible delay in U.S. rate hike to early next year and soaring domestic household debt on lower interest rates, the BOK seems to be taking a preemptive step to minimize volatility.
On Sunday, U.S. Federal Reserve Vice Chairman Stanley Fischer said the Fed is still likely to raise the interest rate this year, but that this was "an expectation, not a commitment," adding there may not be a rate hike this year if the U.S. economy falters.
The BOK and the FSS started the probe initially into BNP Paribas from Oct. 12 to 16, followed by J.P.Morgan from Oct. 19 to 23, Deutsche Bank from Oct. 26 to 30 and Credit Suisse from Nov. 2 to 6.
"Officials from the BOK and the FSS began a one-week investigation this Monday," Judy Jung, a spokeswoman for BNP Paribas Seoul branch, confirmed without elaborating.
Credit Suisse confirmed a second probe is scheduled for early next month. The other banks could not be reached for comment.
FSS data showed the overall value of derivatives transactions reached 43.469 quadrillion won at the end of 2014, down 16 percent from 52.145 quadrillion won a year earlier.
The size of derivatives contracts has continued to fall since 2011.
The financial regulator is looking into the derivatives transactions of four foreign banks which have jumped abnormally since last year, officials said Tuesday.
"The Bank of Korea (BOK) asked the Financial Supervisory Service (FSS) to jointly look into the banks to see if they are involved in any activities that could worsen uncertainties in the financial market ahead of the planned U.S. interest rate increase," said FSS official Um Il-yong.
Transactions of financial derivatives products such as futures, options and forward contracts have been on a gradual decline since last year on the local financial market.
In contrast, the derivatives transactions at Seoul branches of the four banks — BNP Paribas, J.P. Morgan Chase & Co., Deutsche Bank and Credit Suisse — have sharply increased since last year, the FSS said.
"As the BOK closely monitors flows of capital and is responsible for monetary policy, it requested that the FSS join in the investigation," the FSS official said.
The BOK confirmed the probe is underway and it is about derivatives; but refused to elaborate.
With uncertainties growing amid a possible delay in U.S. rate hike to early next year and soaring domestic household debt on lower interest rates, the BOK seems to be taking a preemptive step to minimize volatility.
On Sunday, U.S. Federal Reserve Vice Chairman Stanley Fischer said the Fed is still likely to raise the interest rate this year, but that this was "an expectation, not a commitment," adding there may not be a rate hike this year if the U.S. economy falters.
The BOK and the FSS started the probe initially into BNP Paribas from Oct. 12 to 16, followed by J.P.Morgan from Oct. 19 to 23, Deutsche Bank from Oct. 26 to 30 and Credit Suisse from Nov. 2 to 6.
"Officials from the BOK and the FSS began a one-week investigation this Monday," Judy Jung, a spokeswoman for BNP Paribas Seoul branch, confirmed without elaborating.
Credit Suisse confirmed a second probe is scheduled for early next month. The other banks could not be reached for comment.
FSS data showed the overall value of derivatives transactions reached 43.469 quadrillion won at the end of 2014, down 16 percent from 52.145 quadrillion won a year earlier.
The size of derivatives contracts has continued to fall since 2011.
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