South Korea's Financial Services Commission (FSC), Financial Supervisory Service (FSS) and Korea Exchange (KRX) announced that the country's derivatives market, which is open at the same time as the securities market, will open 15 minutes earlier, at 8:45 a.m., starting July 31.

Since its launch in 1996, South Korea's derivatives market has opened at the same time as its stock market. The prices determined by the derivatives market reflect the various expectations of market participants regarding the future price of the underlying asset (price discovery function). However, unlike overseas markets, the spot market in South Korea opens at the same time as the futures market, making it difficult for investors to spot the price of derivatives in the early hours of stock trading. In addition, due to the same opening time, stock market prices fluctuate greatly, especially in the first 15 minutes or so, because the adjustment that the futures market needs to make before the opening is directly reflected in the stock price.

To this end, the Korean financial authorities and the stock exchange plan to advance the opening time of derivatives by 15 minutes from the current 9:00 a.m. to 8:45 a.m., in line with international standards. As a result, the normal trading hours will be extended by 15 minutes (from the current 9:00-15:45 to 8:45-15:45), and the unit auction time will be reduced by 15 minutes (from the current 8:30-9:00 to 8:30-8:45). In order to prevent excessive price fluctuations in the derivatives market due to the early opening, an 8% price range is implemented for derivatives between 8:45 and 9:00 opening. The early opening of derivatives will start with KOSPI200 futures and options products, and the country's financial institutions will assess market demand and gradually expand the range of derivatives that can be traded in advance.

The Korea Exchange will propose revised rules for public comment from June 8 to June 13. Subject to FSC approval, the derivatives market will be opened early on July 31, 2023. After monitoring their operations, Korean financial institutions also plan to extend trading hours through other means, such as opening overnight trading hours.