The 11th Seoul International Derivatives Securities Conference opened on August 27, hosted by a local daily newspaper. There, Financial Supervisory Service (FSS) Governor Choi Soo-hyeon said, “With another economic crisis looming large in emerging economies, we need a consultative body in which Asian countries can share their case studies about derivatives management so as to revitalize derivative investment in the region.”
The two-day conference was held in the Conrad Hotel in Yeuido under the theme of Changes in Asia and the Future of Investment. The FSS governor stressed that derivatives have played a critical role in the capital market by providing various risk management tools and performing price discovery functions for an effective distribution of financial resources.
The derivatives market of Asia is characterized by assets of exporters moving in an intricate and intertwined web to hedge interest rate and currency risks. The degree of mutual interdependence is increasing rapidly these days in particular, along with the possibility of the spreading of market risks.
The governor’s remarks concerning the establishment of a Pan-Asian consultative body and monitoring systems for better derivatives observation is interpreted as the Korean financial authorities’ strong will to become the hub of derivatives trading in Asia.
Iwan Azis, head of the Office of Regional Economic Integration of the Asia Development Bank, echoed by saying, “Asian nations need to cooperate with one another for the promotion of mutual investment in a framework led by Korea, China, and Japan.” Senior managing director Scot Warren at the Chicago Mercantile Exchange Group also mentioned that an international body is necessary for the sake of risk management with the financial transactions in each country having more and more impact on the global economy.
“The Korean capital market is very volatile given the real economy side’s high reliance upon exports, and the foreign exchange policy of the central bank,” said Korea Capital Market Institute President Kim Hyeong-tae, adding, “This means that derivatives have a bigger role to play in Korea for risk hedging.”