Korea, already one of the fastest growing derivatives markets in Asia, is set to give derivatives activity another boost by allowing securities houses, both foreign and domestic, to offer structured products. The rules ushering in the reform are expected late next month and will open up new interest rate and credit derivatives matkets to the firms. "We want our securities houses to better compete in the world. This sector has been weak, but these new measures will allow them to enlarge their business areas," a senior official at the Ministry of Finance and Economy told DW.
Not surprisingly, derivatives professionals are excited about the new measures. "This is great news for securities houses," said J.S. Kim, senior v.p. in fixed income at Lehman Brothers in Seoul. "This should open the doors for a lot of new businesses," he added.
MOFE officials noted the move will align securities house businesses more closely to the investment-banking model of foreign rivals. The measures further liberalize derivative products onshore, following the licensing of seven local houses for OTC equity derivatives in 2002 (DW, 10/13/02).
Several structurers at international firms noted the potential to market credit products as investment tools to the domestic entities. "This could open new pockets of money," said a regional structuring head at a bulge bracket house.
