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SKOFX Currency Futures and your Business

Korean companies are now allowed to trade with the new currency futures dispensation that came into being since the last SKOFX Board Meeting

SEOUL, SOUTH KOREA, February 5, 2014 / -- Korean companies are now allowed to trade on the underlying exchange rate with the new currency futures (CFs) dispensation that came into being since the last SKOFX Board Meeting.

This offers those in the import and export arena a safety net while giving all companies another potentially lucrative investment option.

In the past, financial instruments used to hedge against currency movements were the domain of the corporate with a large balance sheet and the credit facilities to enter into such transactions. Now all companies can stand to benefit from CF trading - without any Forex allowance restrictions. This is open to corporate entities from trusts, closed corporations, listed and unlisted companies, partnerships and hedge funds.

Besides the usual financial jargon, the concept is relatively simple; the underlying instrument of a CF contract is the rate of exchange between one unit of foreign currency and the Korean currency. Contracts can be purchased in multiples of 1000 of the foreign underlying currency. The contracts are US Dollar denominated and cash settled. There is never a physical delivery of the currency. The SKOFX’s electronic platform ensures that only standardized contracts are traded, resulting in guaranteed settlement, a transparent dealing environment and true price discovery.

“A key reason behind the runaway success of the contract is that an investor is only required to pay a small percentage of the contract upfront, resulting in a relatively low entry cost for the exposure received,” says Robert Namkung, General Manager of Trading at the SKOFX. “This, combined with a low hassle factor compared with other related products, means that CF’s are an ideal option for small and medium businesses where key players simply don’t have the time for burdensome admin.”

South Korea Options and Futures Exchange (SKOFX) is one of the world’s leading futures and options trading venues, with markets based in the Asia, US and Europe offering derivatives on commodities, FX, equities, bonds, interest rates, indices and swaps. Its commercial technology division, SKOFX Technologies provides best-in-class transaction, data, and infrastructure management services and solutions.

Philip Lyang
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