SEOUL Feb 20 South Korea's financial regulator
said on Thursday it plans to establish a 20-year government bond
futures market by 2015 to boost derivatives trading activity and
offer investors' more hedging options.
The Financial Services Commission (FSC), in an annual report
to the president, said a greater variety of derivatives products
will offer investors the ability to properly manage their
This measure comes as the South Korean government seeks to
increase the proportion of longer-term debt to reduce potential
refinancing risks and meet demand from institutional investors
for such products. A futures contract for longer-tenored debt
would help investors cope with risks associated with the less
The FSC also said it will closely monitor a recent spike in
yuan-denominated deposits and any similar trends involving other
foreign currencies for potential risks.
Yuan deposits by South Korean residents jumped
nearly nine-fold between September to January as investors
searching for higher yields invested in short-term, asset-backed
commercial paper that results in simulated yuan deposits in
local branches of Chinese banks via currency swaps.
Bank of Korea Governor Kim Choong-soo said last week that
the spike in yuan deposits was not a major cause for concern,
and policymakers have so far ruled out any change in regulation
to curb the yuan deposit growth.
Finally, the FSC said it plans to announce additional
measures to manage household debt conditions by end-February.
Though it did not disclose specifics, new measures will add to
existing debt restructuring efforts such as boosting the amount
of longer-term and amortising home mortgages to push borrowers
towards more financially sound loans.
(Reporting by Se Young Lee; Editing by Kim Coghill)