The greenhouse gas exposure rights market is barely a month old and it is already expected to be active from the first half of next year when exposure rights supply falls, said Vice President Kang Ki-won of the Derivative Products Market Headquarters. It was his way of showing his confidence in the recovery of the market on Feb. 25.
Vice President Kang added that the EU’s greenhouse gas exposure rights market did not go well from the start and the Korean greenhouse gas exposure rights market, too, would rebound once uncertainty is cleared up.
The government gave the greenhouse gas exposure rights to manufacturing firms, and firms with not enough rights have to buy more on the open market, while those with excessive rights could sell them on the market.
The market opened Jan. 12, but no large deals have been made yet, except for 1,190 tons (KAU Standard) made on the first day of the opening.
Market sources go as far as to put the blame on the government for not providing enough greenhouse gas rights to manufacturing firms for the sluggish market conditions. Led by petrochemical firms, some are thinking about suing the government for the dormant market, which has worsened its market conditions.
But Vice President Kang’s idea is different. He feels that manufacturing firms still need time to figure out whether their rights — given by the government — are enough or not. “It needs more time,” Kang said.
Many firms are just watching the market to see which way it will go and if many firms feel their gas exposure rights are not enough and have to buy more at the market, then those with enough rights would put them up for sale. He said the greenhouse gas exposure rights market has great potential because of tough global regulations on the greenhouse gas restrictions and the industries’ strategies to nurture low-carbon use to secure their competitive edges. The KRX will also try to attract large companies to the market and develop the greenhouse exposure rights futures market to the extent that the KRX would be a hub for those rights in Northeast Asia.
Vice President Kang also said the KRX will try to revive the derivative market, which has been sluggish since the financial crisis. The market had been leading the global derivatives market in 2011, but it’s been pushed out of the list of the 10 largest markets in the world since the financial crisis. The transaction volume of the KOSPI 200 Futures Market last year fell 57 percent compared to those in 2011, while the KOSPI 200 Option trading dropped around 87 percent.
He said the KRX will try to line up the new products for the KOSPI 200 Futures, KOSDAQ Securities Futures and New Dividend Shares Futures Market, and the Futures Shares in Chinese Yuan Currency, so that both domestic and foreign investors can participate in trade in those futures markets in consultation with the financial authorities.
Kang also said the KRX will try to add more foreign currencies and futures products that can be used and traded in its futures markets for derivative products, and add bonds and securities to the market so that domestic investors would be able to invest in foreign securities as well in Korea.
The KRX will also try to improve the image of the futures market, saying that public trust in the market has been eroded in the past several years as the market came through various tough problems.
“We will try to correct the situation as there are means to change the negative image for the derivative products including the strong risk management measures,” the vice president said.
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