Establishing Carbon market has many meanings not only to environment related businesses but also to financial industry as it provides future investment opportunity to Green business.
Since the Korea Stock Exchange, now a part of the KRX after a merger in 2005 began securities trading in 1956, we have been successfully operating securities and derivatives trading, clearing and settlement system for the market for more than half a century. We believe the KRX is the best market for initiating Carbon trading in Korea with low cost and high efficiency in the national perspective, because we can utilize current facilities for trading, professional manpower and our long experience in managing the market.
Second, we believe settlement and clearing service for over-the-counter (OTC) derivatives products like currency swap is one of the businesses that the KRX should develop and provide to Korean financial system. As we have witnessed in the recent global financial crisis initiated by the U.S. sub-prime mortgage, default risk of OTC derivatives is far greater than that of exchange-traded derivatives. We will try to work as the final safeguard to risks in derivatives market by providing stable clearing and settlement service to OTC derivatives products as well.
Third and lastly, we are doing research to list new derivatives products that satisfy various investors' needs by providing diversified derivative products from Volatility Index Futures, which helps investors avoid risks in volatile securities market to Chinese yuan futures to help importers and exporters who are trading with China to hedge possible exchange rate risk. Also, we are studying to introduce short-term interest rate futures, futures products based on major overseas indices and commodity derivatives including crude oil futures to provide diversified investment opportunities to market participants.
In last January, the Korean government designated Seoul and Busan as "International Financial Centers" in Korea and many people showed interest and anticipation to the two cities' future as financial hub in the world. The KRX is ready to run to attain our goal to become the "global hub derivatives market" and with the support from the government and the City of Busan, it is not a mere dream to make the second largest city in Korea as a "Chicago of Asia," an international financial center specialized for derivatives products in Asia. It is the right time to move for the future.
