Busan is good

Korea to begin study linking Korea Exchange with Chicago Exchange

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Korea Exchange (KRX) and the Chicago Mercantile Exchange (CME), the world's single-largest financial market, agreed to conduct joint research on ways to link the two exchanges.

The KRX said on Thursday (Mar. 30) that the two exchanges reached an agreement on commencing the study at the 2006 International Derivatives Symposium held between March 29-30 at the Paradise Hotel in Busan, organized by the KRX to commemorate its first anniversary and the 10th anniversary of opening KOSPI 200 futures market.

The two exchanges will study the possibilities of stock exchange cross-border networking and ways to list new financial derivative products on both the KRX and the CME.

“If the cross-border linkage with CME goes through, Korean investors will be able to trade financial derivatives listed on the CME electronically at their homes,” said KRX chairman and CEO Lee Young-tak at the symposium.

Lee noted that the joint study marks the first practical joint efforts by Korea and the U.S. to beef up bilateral financial industrial cooperation.

“The deal will accelerate promotion of Korean-U.S. cooperation in the financial sector, contributing to advancement of the Korean financial industry,” Lee said.

“On the national level, foreign capital and overseas financial market information will flow into Korea when the KRX and the CME are connected, thereby facilitating Korea's vision to emerge into the Northeast Asian financial hub,” he said.

As Lee pointed out Korean investors can invest in financial derivatives traded on the CME and American investors in products such as futures options and futures contracts traded on the KRX via the CME's Globex electronic trading platform 24-hours a day if the two exchanges are connected as planned.

Last November, the KRX and the CME renewed their memorandum of understanding (MOU) to pursue joint business development of financial derivative products.

Under the agreement, originally signed Oct. 22, 2002 with the Korea Futures Exchange (KOFEX), the exchanges will continue to discuss a variety of cooperative opportunities, including product development and information sharing.

The Korea Exchange Inc. was created in January 2005 through the merger of the Korea Stock Exchange, the Korea Futures Exchange (KOFEX), the tech-heavy KOSDAQ market and the KOSDAQ committee, and is the sole exchange in Korea.

Lee believes that CME would help the KRX become more familiar with international derivatives market practices, products and regulations.

Attendees to the symposium include CME chairman emeritus Leo Melamed, Taiwan Futures Exchange vice president Arthur Yeh, Tokyo Commodity Exchange director Hiroshige Murata, ABN AMRO Asia Merchant Bank CEO Steve Ng, Tokyo Stock Exchange Executive Officer Toshitsugu Shimizu, EUREX head of clearing strategy Orlando Chiesa and Singapore Exchange advisor Peter Chia.

The source of news : Korea.net  March 31, 2006