Korea Exchange Clearing and Settlement Department, "Strengthening Response to ATS and Night Derivatives Market Introduction"

"Leading Clearing and Settlement Services at Global Top 5 CCP Level"

The Korea Exchange (KRX) Clearing and Settlement Headquarters announced on the 19th that it will strengthen its clearing and settlement operation processes and infrastructure in response to the introduction of Alternative Trading Systems (ATS) and the night derivatives market.

Park Chan-su, Head of the Clearing and Settlement Department at the Korea Exchange, is conducting a briefing session on the department's ongoing projects at the Korea Exchange in Yeouido, Seoul, on the 19th.
[Photo by Lee Seung-hyung]

At the 3rd anniversary project briefing session of the Clearing and Settlement Headquarters held that day, Park Chan-su, head of the KRX Clearing and Settlement Headquarters, emphasized, "The importance of risk management in the capital market by the Clearing and Settlement Headquarters is increasing."

Established on April 16, 2021, the KRX Clearing and Settlement Headquarters is an organization created to advance clearing and settlement by enhancing the independence and expertise of clearing and settlement operations. Since 2022, it has been implementing the reduction of over-the-counter (OTC) derivatives transactions to lower trading costs and risks by shrinking the scale of OTC derivatives settlements.

Since its establishment, it has contributed to enhancing the stability of the Korean capital market through expanding clearing and settlement execution resources, strengthening risk management, and broadening the scope of clearing targets. In the KRX clearing and settlement scale last year, the average daily trading value in the securities and derivatives markets reached 3.3 trillion KRW, and the clearing amount in the OTC derivatives market recorded 1,280 trillion KRW, growing by 11.7% and 6.7% respectively compared to the previous year.

In addition to quantitative growth, efforts have been made to increase trust as a global Central Counterparty Clearinghouse (CCP). The KRX CCP has been certified as a global-level CCP by supervisory authorities from advanced markets such as the United States, Europe, and Japan.

In response to the introduction of ATS and the night derivatives market, the Exchange is promoting improvements in clearing and settlement operation processes and infrastructure. It will establish integrated clearing and settlement operation regulations to unify rules related to clearing and settlement operations and introduce a margin system based on maximum loss amount (VaR) to ensure stable clearing and settlement. Furthermore, to closely measure market risks, the frequency of margin calculations will be increased to strengthen monitoring, and CCP risks will be managed through default response drills.

A KRX official stated, "We will grow into a global CCP," adding, "We will continuously promote improvements in CCP infrastructure and clearing and settlement services, expand CCP business areas, and advance CCP risk management systems."