The Korea Exchange (KRX), the operator of South Korea’s stock market, said Wednesday that it has signed an agreement with its German counterpart to cross-list their derivatives products on each other’s stock markets by June.

Under the agreement, EURO STOXX 50 Index Futures products will be listed on the Korea`s main stock market for local investors. Mini KOSPI 200 Futures products will also be available on the Eurex derivatives trading market in Germany.

Starting June, Korean investors can trade EURO STOXX 50-based futures in Korean currency. Transaction fees will be between 2,000 won and 5,000 won per contract, down by up to one third from now.

EURO STOXX 50 refers to the index based on 50 leading stocks from 12 eurozone countries. EURO STOXX 50-based futures will be the first derivatives product based on an overseas index to be introduced in Korea.

Investors in China and Southeast Asia in the similar time zone to Korea are also expected to buy and sell the new index futures, which was the world’s fourth popular derivatives product in terms of transaction volume last year. The index is also widely used in Korea, as the country’s equity-linked securities (ELS) issuance based on the index reached 5.55 trillion won in the first quarter, the second largest volume behind the ELS issuance based on the KOSPI 200 index.

In return, mini KOSPI 200 futures will be listed on the Eurex. Mini KOSPI 200 futures refers to the index based on 200 leading Korean stocks but the contract size is one fifth the actual KOSPI 200 futures index. As KOSPI 200 options are already on the Eurex, investors can trade the index-related futures and options at the same time, meaning they can manage risk related to Korean stocks more effectively. The listing of Mini KOSPI 200 on the Eurex is due to be around the end of this year.

By Han Ye-kyung, Yong Hwan-jin

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