Korea Exchange is seeking to enhance its appeal to international market participants by introducing several changes to its trading rules and technological infrastructure. For example, the exchange is working with the Korean government to allow foreign investors to use omnibus accounts.
This would allow foreign investors to trade on KRX without having to set up separate accounts for each fund, which would make the trading process far easier for investors and their brokers. Although the necessary regulatory changes have not been finalized yet, the exchange expects that omnibus accounts will be permitted in the coming months.
KRX officials have advised market participants that the omnibus account structure will be implemented with visibility into positions as the sub-account level. Margin will be calculated on a gross basis, i.e., no netting between sub-accounts, and each sub-account will have separate position limit.
Another change in the works is to set up a new market data distribution system in Busan for the exchange's Kospi 200 futures and options. The exchange's matching engine is based in Busan, so the move will reduce the amount of time it takes for market data to reach traders relative to the existing system, which routes market data through Seoul. Exchange officials say KRX also expects to introduce a real-time drop copy service this year. Drop copy services provide trading firms and brokers with a "carbon copy" of order messages received by an exchange. This allows market participants to monitor their trading activity in real time and has proven to be an important tool for managing risk.
