Eugene Investment&Futures

No, all orders must be placed through futures trading companies, which are Clearing or Non-Clearing Members. The Members are responsible for all transactions. 

Circuit breaker is being operated on only KOSDAQ50 index futures.The conditions of exercise are as follows.When the lead month contract hits ±7% of the previous day's closing price for 1 minute, and the deviation rate of the current futures price from the theoretical price is, or more than ±3%, the trading of all contracts are halted for next five minutes. The market will be halted for the same time the stock market's halt if the stock market suspends.  

KRX does not require any explicit risk management tools. Members have their own software for their accounting purposes. Moreover, the Financial Supervisory Service (FSS) closely watches the financial status of Members. 

The Good Faith Deposit, the minimum amount of KRW 50 million for each Member, is a refundable deposit to encourage Members to fulfil their obligations. The current total amount is KRW 600 million. The amount for any newcomer will be adopted through a resolution of a Board of Directors' meeting.  

The current amount of the Guarantee Fund is around KRW 23billion as of Jan. 2, 2002. 

KRX is trying to make an agreement with a bank to get a letter of guarantee amounting about KRW 30 - 50 billion. KRX has not concluded a credit insurance contract yet. 

1. The defaulted Member's property among the Exchange margins, Good Faith Deposit, Guarantee Fund and the others deposited by such Member.
2. The property of the customer that caused the default
3. The reserve for the loss compensation of KRX
4. The Guarantee Fund of the other Clearing Members deposited with KRX 
5. Insurance money pursuant to a credit insurance contract
6. Money provided by the letter of bank guarantee
7. KRX may have Clearing Members cover the rest. 

To protect customers' interests, FTA prescribes that a Member must deposit Customer margins with the Korea Securities Finance Corporation (KSFCO) and Exchange margins with one of the 4 banks designated by KRX as a segregated client account in order to protect customers. In the meanwhile, in case of securities deposited by customers, a Member must deposit customers' securities with the Korea Securities Depository (KSD) as a segregated client account.

A Member opens and maintains two accounts at the KSD and any one of the 4 banks and one account at the KSFCO. One is for the margin deposits of customers' transactions and the other is for the margin deposits of member's transactions. Since the Customer margin (between Member and customer) is generally much bigger than the Exchange margin (between KRX and Member), the difference between Customer margin and Exchange margin will be held in a segregated client account at KSFCO to protect customers. 

A customer deposits Customer margin on her/his net position with a Member. However, a Member posts Exchange margin on its gross position, based on its customer's net positions, with KRX.