KOREAN REPUBLIC: KRX Make Improvements to its Derivatives Market Rules

Monday June 19 2023

On 15^th June 2023, the Korea Exchange (KRX) announced that it will make improvements to its Derivatives Market Rules, including annual update to the single stock futures options product line and the new Monday Weekly Option product. The improvements are to be applied starting on July 31^st, 2023.

Improvements:

Single Stock Futures Options:

KRX will be amending rules regarding selection of underlying stocks for single stock futures and options. 2023 update to underlying stocks will follow the newly instated rules.

Underlying stock selection will occur semi-annually(in Mar and Sept). Selection requirements will be amended such that the underlying stock must be represented in flagship domestic indices, such as KOSPI 200 and KOSDAQ Global Index.

Monday Weekly Options:

KRX will also be adding a new KOSPI 200 Weekly Option with Mondays as expiry to complement the already existing KOSPI 200 Thursday Weekly Option. The new product will be listed and expire on Mondays, allowing for more sophisticated risk management from market events that occur during the weekend.

If Monday is a market holiday, then the option expiry date will be pushed back(instead of being brought forward, as is the case with other options). Other applicable rules are the same as the Thursday Weekly Option.

Futures Spreads:

Negotiated block trades for 8 equity futures spreads, including KOSPI 200, will be permitted on KRX Derivatives Market. For a comprehensive list of products and specifications.

Effective Date:

From June 15^th, 2023, to June 22^nd, 2023, KRX will be announcing amendments to the Enforcement Rules of Derivatives Market Business Regulation. KRX will also be receiving feedback from market participants during that period.

The amendments to the enforcement rules outlined above will be effective starting on July 31^st, 2023, pending further opinion from market participants.

Click on the above link for further information