CME Group, the world’s largest and most diverse exchange, and the Korea Exchange (KRX), a premier capital market place for Northeast Asia, announced today that they intend to enter into an agreement for the KOSPI 200 futures contract to be listed on CME Globex®, the electronic trading platform of CME Group, beginning in 2008. The terms of the proposed five-year agreement will include the creation of a telecom hub in Seoul and would mark the first time KRX has embarked on a third-party agreement for its popular KOSPI 200 product.
A signing ceremony of the proposed terms with Korea Deputy Prime Minister O-Kyu Kwon and officials from both exchanges will be held on Wednesday at the Chicago Mercantile Exchange building.
More than 32 million KOSPI 200 futures, based on the KOSPI 200 stock index of the largest South Korean companies as measured by market capitalization, traded through August of 2007. Under the proposed agreement, CME Group will match the trades, with KRX continuing to clear and settle their products.
The contract, which will trade from 2:00 a.m. to 3:00 p.m. Chicago time, or 5:00 p.m. to 6:00 a.m. Seoul time, will be offered on the same platform as CME Group products, including derivatives on: Eurodollars; U.S. Treasury bonds and notes; the S&P 500®, NASDAQ-100®, Dow Jones Industrial Average(SM), and MSCI EAFE® stock indexes; foreign exchange; grains; livestock; weather; real estate and more.
"The addition of the Korea Exchange’s KOSPI 200 contract onto CME Globex will be an important part of our continued global expansion," said CME Group executive chairman Terry Duffy. "CME Globex is the one trading platform that provides market users with access to all of the major asset classes. The addition of the KOSPI 200 futures will offer yet another key market to our electronic trading customers worldwide."
"Our proposed agreement with the Korea Exchange is a prime example of how CME Group is further extending its reach into the Asia marketplace," said CME Group ceo Craig Donohue. "The Asia region is a vital area of long-term growth for both our products and our transaction processing services. We look forward to adding the KOSPI 200 futures to CME Globex, enabling this benchmark product to benefit from the speed, reliability and transparency of our industry-leading platform."
"The Korea Exchange has done a remarkable job growing its business and helping to develop the capital markets in Northeast Asia," said Leo Melamed, CME chairman Emeritus. "We look forward to working with KRX and providing even more accessibility to their markets."
"Opening a night session with CME Group will help us greatly in globalizing the KRX," said KRX chairman and chief executive Young-Tak Lee. "This proposed agreement will open up the prospect for our two exchanges to explore together the ocean of opportunities in Asia, as well as to lead the further advancement of global derivatives markets."
In January, electronically traded products at the Chicago Board of Trade, now part of CME Group, will move to CME Globex, save metals.
CME Group and KRX are working toward signing the definitive agreement. The proposed transaction will only proceed if the parties sign a definitive agreement. There can be no assurance that any definitive agreement will be signed.