As China's stock options and stock index options are gradually approaching, we might as well take a look at Korean options, which is the stone of other mountains.
Since 1997 introduced the Korean stock index option, it has been enthusiastically sought after by investors. In 2000, KOSPI200 index options made it into the top five in the world for the first time, and then ranked first for many years, becoming an unprecedented "dark horse" in the international derivatives market.
The successful launch of Korean stock index options has greatly enhanced the pride of Korean nationals. In contrast, the mainstream view in many European and American countries does not think that Korean stock index options are successful products. Why is there such a contrast? What are the experiences and lessons of South Korea's options market?
Reasons for the rapid development of South Korea's option market
The author believes that the reasons for the rapid development of the Korean option market are as follows:
First of all, the regulatory authorities are aware of the necessity of using derivatives to improve their ability to resist risks. The reason why South Korea failed to withstand the financial crisis of 1997 is that it failed to improve the risk management market in time, in addition to its backward economic system. This makes regulators more deeply aware of the important role of derivatives as a risk management tool.
Second, the product design adapts to the characteristics of large fluctuations in the spot market in the Korean market. Compared with other products, the price fluctuation of KOSPI200 benchmark index is greater, which increases the enthusiasm of hedging investors and speculative traders. The volatility of KOSPI200 index is only lower than the European market index with debt crisis, but higher than the major indexes of the United States, India, China, Taiwan Province, Japan and China. High volatility makes virtual options the most popular among investors. Korean investors are willing to buy hypothetical options with smaller delta to fully realize small and wide effects.
Third, the transaction cost of KOSPI200 stock index options is relatively low. Unlike most countries in the derivatives market, options charge a fixed fee according to the contract trading volume. Korean exchanges and securities companies charge trading commissions in proportion to the option premium. The smaller the premium, the lower the cost. The fierce competition of futures companies for new customers keeps this ratio at a low level.
Fourth, the risk control system is relatively strict. For example, in order to prevent malicious manipulation of the market operation, the exchange monitors member positions at any time, and the net position of member futures cannot exceed 5000 lots; Set the fluctuation range of premium price in the next trading day not to exceed the closing price of KOSPI200 index on the day of option theory price plus/minus 15%; The COMS portfolio margin system is independently developed, and specific calculation methods are designed for different asset types, trading directions, delivery time and trading purposes, which is more in line with emerging markets.
Fifth, the IT infrastructure is sound. At present, DMA (Direct Market Access) transactions based on electronic transactions account for more than 90% of all transactions, further reducing transaction costs. Since 20 13 and 1, the exchange has adopted a vitamin system to take preventive measures in advance for abnormal situations and quickly analyze and react when the option price fluctuates greatly. Through early warning, discovery and analysis, comprehensively analyze the continuity, trading mode and profit and loss situation between spot and futures market accounts, and take measures against illegal trading accounts. From February 20 14, the new generation trading system and real-time information transmission system texture+ were fully launched, and the maximum capacity was upgraded from 80 million transactions/day to 1 100 million transactions/day.
What are the lessons?
So what are the lessons of developing the option market in South Korea?
First, individual investors are excessively involved. The participation rate of individual investors in Korean stock index options market is high, and individual investors are often buyers of options, so the pricing of Korean stock index options is often high. The Korea Stock Exchange has to take measures to regulate the excessive inflow and overheated speculation of individual investors. From March 2065438 to March 2002, the Korea Stock Exchange increased the option trading multiplier from 654.38 million won to 500,000 won.
Second, the public misunderstood the derivatives market. At the beginning, many people thought that option trading was a kind of speculation similar to gambling. A newspaper once published an article saying that all the funds that should have been invested in the stock market entered the derivatives market, thus questioning the rationality of the existence of option products.
Third, the behavior of brokerage companies is not standardized. The competition for futures brokerage companies to attract customers is fierce. Some brokerage companies only strive for customers and ignore explaining market risks to customers. In order to retain customers, they often transfer risk management to exchanges.
Fourth, IT system and transaction system failures have occurred many times. At the beginning of 2000, when the electronic trading system was fully promoted in Korea, the trading instruction system was interrupted or delayed from time to time. For example, from 2: 30 pm to 2: 47 pm on September 6, 2002, because the bidding was too concentrated, the system suddenly increased from 500 to 600 transactions per minute to about 800 transactions per minute, resulting in a delay of more than 1 minute. Such incidents have caused lawsuits from investors, which has brought great pressure to Korean exchanges.
Fifth, opening to foreign-funded institutions too early. With the promotion of market-oriented reform after the financial crisis, the proportion of foreign investment transactions is on the rise, accounting for about 50%~55%, but the opening of foreign investment also brings market supervision risks. 20 10, 165438+ 10 month, 1 1, the KOSPI composite index of Korea suddenly dropped by 48 points in the last 10 minute of trading, plunging nearly 2.8%. * * * A total of 2.4 trillion won of foreign investors' orders were executed, including 65,438+. This kind of market manipulation has seriously disrupted the market order.
China should improve the risk management system and system design.
Here, China should learn from the experience and lessons of Korean option market and improve the risk management system and related system design.
In terms of risk management, establish and improve the membership approval and margin system, and introduce a "fuse mechanism" to avoid drastic market fluctuations. Establish an effective credit evaluation system, reduce the occurrence of moral hazard and credit risk, and combat market manipulation. At the same time, we should establish a cross-market joint monitoring system including stock index futures market and stock index option market, implement joint monitoring, establish and improve the emergency handling mechanism of market emergencies, and deal with abnormal situations in the securities market.
Market participants should be positioned as institutional investors. Because individual investors are weaker than institutional investors in capital scale and professional ability, in the initial stage of introducing stock index options, China can set the contract design scale higher and take the route of "specialization first, then popularization", that is, attract professional institutional investors first, then appropriately reduce the contract scale and launch small index contracts, and after a period of operation, attract small and medium-sized investors to enter the market.
For the prevention of manipulation cases, we should strengthen the supervision of expired transactions and crack down on market disruption. For example, increase the minimum initial margin amount, strengthen the restrictions on members' futures positions, increase the number of times to check market risks and collect additional margins in one day, and increase the margin ratio.
In terms of transaction costs, China can learn from the Korean practice and charge transaction costs according to the commission ratio, which can stimulate the trading of virtual options; The second is to attract the active participation of small and medium investors. The fierce competition among brokers for new customers keeps the commission rate at a low level. This is of great help to the initial cultivation of the market. The premium of Shanghai and Shenzhen 300 stock index options should be lower than the current transaction cost of Shanghai and Shenzhen 300 stock index futures.
In addition, China should increase training for new investors and lectures on new products, introduce trading varieties of stock index options, and enhance investors' understanding of option contracts.