By Park Hyong-ki
Staff Reporter
Domestic and foreign investors will be able to trade the KOSPI200 futures round the clock from the second half of next year through the electronic trading system of the Chicago Mercantile Exchange Group, the Korea Exchange said.
The world's two largest futures exchanges signed a letter of intent at the group's headquarters Wednesday on the trading of the KOSPI200 futures on the CME Globex, a 24-hour electronic trading system.
Last year, about 75 percent of all trading on the Chicago stock market took place through the 24-hour trading platform.
KOSPI200 futures are derivatives comprised of 200 blue chips on the basis of market value and trading volume.
The futures market division of the exchange said that it plans to open the market in the second half of next year.
Investors abroad wishing to invest in KOSPI 200 futures will have to open an account at a domestic securities or futures company first, and will then be able to trade Seoul futures via the Globex in Chicago.
All investors _ both nationals and foreigners _ are required to abide by domestic securities rules when trading starts, according to the letter of intent.
``The partnership with the CME will help create more competitive trading environment,'' KRX CEO Lee Young-tak said.
The CME deals with trading and the KRX will handle clearing and settlements.
The KRX said it will boost its human resources networks between the exchange and brokerage houses to keep futures trading active during after trading hours in Korea. The futures market is expected to be validated by the U.S. Commodity Futures Trading Commission.
The KRX seeks to learn from the CME about the operation of a 24-hour trading system as it hopes to develop its own all-hours platform in the near future.
The decision to list the KOSPI200 futures on the CME reflects the Seoul bourse's commitment to internationalize its trading system as global mergers and acquisitions between exchanges have become the norm.
Global exchanges are expanding trading hours and introducing new innovative products to lure investors, prompting the KRX to join hands with the CME Group in derivatives.
The CME Group is the world's biggest exchange after it merged with the Chicago Board of Trade in terms of market capitalization, while the KRX is the biggest futures market in terms of trading volume, followed by the CME and the Eurex. The Chicago stock market is recognized as the world's first creator of futures products.
The two forces combined will provide a boost to both derivates markets, said CEO Lee.
``I am sure that this alliance will allow for the two exchanges to explore opportunities in Asia as well as lead to the further development of the global derivatives market,'' said Lee.