S. Korean financial derivatives market further contracts in 2013

SEOUL, April 7 (Yonhap) -- South Korea's financial derivatives market suffered a sharp downfall in its trading volume last year on stricter regulations, data showed Monday.

The turnover of financial derivatives on the local bourse reached 820 million contracts last year, down 55.3 percent from a year earlier, according to the data compiled by the Korea Exchange (KRX). In terms of amount, the turnover also sank 12.3 percent on-year last year, the data showed.

The market slump came as the country's financial regulator imposed stricter rules for derivatives trading. From 2011, the regulator raised the minimum price to buy or sell options contracts in a bid to limit individual investors.

As for equity-linked warrants (ELWs), it also raised the amount of the required initial deposit, while further limiting the bid price for liquidity providers.

In contrast, the global financial derivatives market grew 2.1 percent on-year last year with its turnover reaching 21.6 billion contracts, driven by a growth in the trading of interest rate-related derivatives and commodity-linked derivatives, the KRX said.

South Korea held the world's largest derivatives market in 2011 with 3.93 billion contracts, but was relegated to fifth place in 2012. This year, the country ranked ninth, the data showed.

Derivatives are financial products that draw value from other financial instruments such as stocks, bonds, currencies and commodities as well as events.

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