Over-the-Counter Derivatives Transaction Collateral Holdings at 9.5 Trillion Won... Up 17% Year-on-Year

[Asia Economy Reporter Lee Seon-aeThe amount of collateral (margin) held for over-the-counter derivative transactions managed by the Korea Securities Depository (KSD) was recorded at 9.4621 trillion KRW as of the end of last year. This represents a 17.3% increase compared to the end of the previous year (8.0678 trillion KRW).

According to KSD on the 14th, bonds accounted for 7.733 trillion KRW, making up 81.7% of the total collateral. Treasury bonds amounted to 6.9978 trillion KRW (90.5%) and Monetary Stabilization Bonds (Tuanchae) accounted for 442.4 billion KRW (5.7%), together comprising 96.2% of the bond collateral.

The remainder consisted of listed stocks worth 1.1242 trillion KRW (11.9%) and cash totaling 604.9 billion KRW (6.4%).

Among the total collateral, the amount held as variation margin was 9.1475 trillion KRW (96.7% of the total collateral amount). This is a 13.4% increase compared to the end of the previous year (8.0678 trillion KRW).

Initial margin began to be held for the first time starting from September last year, and as of the end of last month, 314.6 billion KRW (3.3% of the total collateral amount) was held. Among the bonds deposited as initial margin, treasury bonds accounted for 160.3 billion KRW (51.0%) and Monetary Stabilization Bonds accounted for 154.3 billion KRW (49.0%).

KSD explained that by establishing infrastructure for holding initial margin following variation margin, it has laid an institutional foundation that allows domestic and foreign financial institutions to stably use Korean government bonds as collateral.

They also noted that as account management contracts with domestic and foreign financial institutions continue to be signed, the amount of initial margin held is expected to increase significantly in the future.

This content was produced with the assistance of AI translation services.