Prof. Jayanth R. Varma's Financial Markets Blog

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Prof. Jayanth R. Varma's Financial Markets Blog, A Blog on Financial Markets and Their Regulation

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Mon, 03 Jun 2019

Korean derivatives reforms come full circle

Back in 2011, South Korea embarked on a significant clampdown on retail participation in its equity derivatives market which is one of the largest in the world. The result of these measures was to effectively hand over the Korean derivatives market to foreigners. As for protecting retail investors from speculative misadventures, probably the only effect was to divert the speculative energies into bitcoin, exotic structured products and the like. It took the Koreans eight years to realize that the 2011 measures had basically thrown the baby out with the bathwater. Now they are pedalling back furiously and trying to bring Korean investors back into the market. The announcement last week by the Korean Financial Services Commission (FSC) reads like a mea culpa (if you read between the lines).

This episode holds a lot of lessons for India as well as we too have a host of would-be reformers who would love to clampdown on retail speculation in equity derivatives. There is every reason to believe that if they succeed, the results will be similar to that in Korea – the purported cure will be worse than the purported disease.

Posted at 13:26 on Mon, 03 Jun 2019     1 comments     permanent link


Prabhat Singh wrote on Sat, 22 Jun 2019 14:04

Re: Korean derivatives reforms come full circle

Hi Sir, MY self Prabhat Im Option trader from 2013 in broking House , some days back went to your article about international margin requirement . I know their a big trading desk specially broker desk do spread trading like butterfly and many other , and make consistently return . Im doing my own research in option I need your help , I think still very wide opportunity, in option specially in indian market. Because hiher margin requirement for retail participant retail mindset always fascinate speculation and end up with losing money . I know many of my friend who trade with me in office Now trade in US Market because of less margin requirement and happily beared high brokerag, Please connect me .Thanks Prabhat From Mumbai 9987558701