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S. Korea to ease regulations on derivatives trading

17:00 May 30, 2019

SEOUL, May 30 (Yonhap) -- South Korea's financial regulator said Thursday it will ease regulations on derivatives trading later this year as it seeks to attract risk-taking investors to the local derivatives market.

The move comes as a growing number of local individual investors trade foreign derivatives products because of tighter regulations on local derivatives products.

Currently, retail investors in South Korea must have a payment guarantee of between 20 million won (US$16,823) and 100 million won in their accounts to carry out transactions of local derivatives products.

In a statement, the Financial Services Commission (FSC) said it plans to lower the payment guarantee to 10 million won.

S. Korea to ease regulations on derivatives trading - 1

Retail investors are also required to complete a 30-hour class on the risks of derivatives trading and a 50-hour simulation of such trading.

Under the deregulatory move, the class and the simulation will be reduced to one and three hours, respectively, the FSC said.

The trading volume of foreign derivatives products by Korean retail investors rose to $1.8 trillion in 2017, compared with $500 billion in 2011, according to the FSC data.

Korean retail investors have shunned the local derivatives market with them accounting for 13.5 percent of total investors in 2018, compared with 25.6 percent in 2011, the data showed.

South Korea's derivatives market had flourished, but started losing investors in 2011, when financial authorities tightened rules to curb speculative activities.

The daily average trading volume of derivatives products here totaled 45 trillion won in 2018, compared with 66.3 trillion won in 2011, according to the data.



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