It was just announced this week from Eurex Group, one of the leading derivatives exchanges globally that Korean Won denominated EURO STOXX 50 futures were successfully listed on Korea Exchange on 27 June 2016.
EURO STOXX 50 futures is the first listed derivative product based on a foreign equity index and will build a foundation for Korea Exchange to position itself as a premier Asian financial hub. The goal of the contract is to create a favorable environment for domestic investors to trade foreign derivatives by reducing transaction costs and foreign exchange risk.
Eurex’s EURO STOXX 50 futures are one of the most liquid and heavily traded index derivatives products in the world. Average daily trading volume in 2016 has been around 1.6 million and open interest stands at more than 4.1 million contracts. Korea Exchange expects that the listing will decrease the transaction cost of domestic investors such as ELS (Equity-Linked Securities) issuers and permit foreign investors to manage risks of the European market in Asian time zone.
Representing Eurex, Markus Georgi, Head of Hong Kong Representative Office said:
“I would like express our sincere gratitude to KRX, one of our most important partners in Asia, for your hospitality and invitation to the launch ceremony today. We are honored to join KRX to celebrate the successful launch of our cooperation product, the Korean Won-denominated EURO STOXX 50 futures.”
At 10:25 on 27 June trading of the EURO STOXX 50 futures officially started. The new contracts will have a multiplier of KRW 10,000 and have three quarterly contract months. Trading time is 09:00 – 15:15 Korean time and trading holidays are the same as for the existing KRX equity-index products. Position limit is 50,000 contracts for institutions and 25,000 contracts for retail investors.
The listing of EURO STOXX 50 futures at KRX is the next step to Eurex’s strategic partnership with KRX to provide market participants more trading and hedging opportunities on both exchanges. The partnership between Eurex and KRX that was founded in August 2010 with the establishment of the Eurex/KRX Link, that has been given Eurex Exchange Participants direct access to KOSPI 200 Options, one of the most heavily traded options contracts in the world, after Korean trading hours.
The first trading day saw a volume of 1142 traded contracts with a trading value of KRW 30.975 billion and an open interest of 18 contracts. Liquidity was provided by eight Market Makers and 30 brokers participated in the trades.
Euro Stoxx 50 September 2016 (FXU16) contract price chart. The Euro Stoxx 50 sold off heavily after Brexit but has since staged a brief recovery. Courtesy: Barchart.