S.Korea eyes curbs on FX margin trading from Sept

July 16, 2009

KOREA    SEOUL, July 16 (Reuters) – South Korea will sharply lower the leverage investors can employ when trading currencies via margin trading to discourage speculative trading, the top financial regulatory agency said on Thursday.
   Investors will be required from September to deposit 5 percent of the value of their bets as collateral with brokers, up from the current 2 percent. Maximum leverage will be lowered to 20 times from 50 times at present.
   The Financial Services Commission said in a statement the move was aimed at putting the brakes on sharply increasing margin trading by mainly individual investors on the back of a jump in online trading.
   Margin trading allows investors to make leveraged bets on currencies and has grown increasingly popular in recent years among retail investors in South Korea and Japan.
   Such trading is carried out over the counter and the agency’s move will have no impact on the spot currency market, the commission said.
   It said the value of foreign exchange margin trading amounted to 357.7 trillion won ($281.5 billion) for the first five months of this year, compared with 418.8 trillion won for all of last year and only 55.9 trillion won in 2007.
   South Korean investors, 99 percent of them individuals, lost 45.5 billion won from the margin trading for the January-May period. ($1=1270.6 Won) (Reporting by Yoo Choonsik; Editing by Jonathan Hopfner) ((choonsik.yoo@thomsonreuters.com; +82 2 3704 5580; Reuters Messaging: choonsik.yoo.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)) Keywords: KOREA FOREX/MARGIN
Thursday, 16 July 2009 04:00:06RTRS [nSEO213834] {C}ENDS

No comments so far

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/