Korea Exchange to Open 30-Year Treasury Bond Futures Market on the 19th

The Korea Exchange announced on the 6th that it will open the 30-year government bond futures market on the 19th to promote the development of the government bond market and provide a hedging tool for ultra-long-term interest rate fluctuation risks.

Korea Exchange, Yeouido, Seoul. Photo by Jinhyung Kang aymsdream@

This is the introduction of a new government bond futures contract 16 years after the launch of the 10-year government bond futures in February 2008. The introduction of the 30-year government bond futures was driven by the increase in issuance and trading of ultra-long-term government bonds, which created demand for exchange-traded derivatives based on these bonds. Last year, the 30-year government bond accounted for about 76% of the issuance volume of ultra-long-term government bonds.

To establish the 30-year government bond futures market, the Exchange selected six market makers last month on the 18th (Kyobo Securities, Meritz Securities, Shinhan Investment Corp., Kiwoom Securities, Hi Investment & Securities, and Hanyang Securities) and has been operating a simulation market from the 17th of last month until the 16th of this month.

With the opening of the 30-year government bond futures market, it is expected to be actively used for hedging ultra-long-term government bond interest rate fluctuations by insurance companies and pension funds, as well as for hedging government bond forward transactions by securities firms, banks, and foreign entities. Additionally, through arbitrage trading between different maturities using the yield curve and cash-futures arbitrage, the growth of the cash and futures markets will accelerate, and the price discovery function will improve, enhancing market confidence. Furthermore, it is expected to expand the investor base and liquidity in the ultra-long-term government bond market.

An official from the Exchange stated, "With the listing of the 30-year government bond futures, the Exchange has completed a lineup of interest rate futures ranging from the 90-day short-term interest rate (KOFR) to the 30-year ultra-long-term government bond rate." He added, "We expect domestic and international investors to actively utilize the Exchange’s government bond derivatives as investment and risk management tools, leading to innovation and growth in the domestic interest rate market ecosystem, including bonds, over-the-counter interest rate derivatives, and exchange-traded products (ETPs)."

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