Is there any Clearing House for clearing futures and options transactions traded on KRX? 

Q. Is there any Clearing House for clearing futures and options transactions traded on KRX? 

One of the main functions of KRX is performing the role of Clearing House for the settlement and guarantee of each transaction.
KRX clears all futures and options transactions traded on it, so there is no distinction between KRX and a Clearing House.
One team in KRX operates the whole clearing business like CME.

Does KRX monitor the capital levels of Members? What are the reporting requirements? 

Q. Does KRX monitor the capital levels of Members? What are the reporting requirements? 

KRX monitors the Exchange margin deposits of all Members everyday and checks their financial requirements every month.
KRX requires all Members to submit monthly financial statements.
If they do not satisfy the financial requirements, KRX can suspend all or part of their futures trading within a six months period.

Does a foreign investor need an investment registration card (IRC) to trade futures and options listed on KRX? 

Q. Does a foreign investor need an investment registration card (IRC) to trade futures and options listed on KRX? 

KRX does not require the IRC for foreign investors to trade futures and options listed on KRX.

Would you describe the margin flow? 

Q. Would you describe the margin flow? 

Is it a business rule that margins must be placed before trading? 

Q. Is it a business rule that margins must be placed before trading? 

Yes, for the transaction between a customer and a Member, the customer must deposit her/his Customer margin with the Member before trading.
A Member is not allowed to place an order without sufficient margin posted.
For the transaction between KRX and Members, Members do not have to deposit the Exchange margins with KRX before trading.
In accordance with the Rules and Regulations of KRX, they can deposit the Exchange margins by noon of T+1 day.

Does KRX require margins to be held in segregated client accounts? 

Q. Does KRX require margins to be held in segregated client accounts? 

To protect customers' interests, FTA prescribes that a Member must deposit Customer margins with the Korea Securities Finance Corporation (KSFCO) and Exchange margins with one of the 4 banks designated by KRX as a segregated client account in order to protect customers.
In the meanwhile, in case of securities deposited by customers, a Member must deposit customers' securities with the Korea Securities Depository (KSD) as a segregated client account.
A Member opens and maintains two accounts at the KSD and any one of the 4 banks and one account at the KSFCO.
One is for the margin deposits of customers' transactions and the other is for the margin deposits of member's transactions.
Since the Customer margin (between Member and customer) is generally much bigger than the Exchange margin (between KRX and Member), the difference between Customer margin and Exchange margin will be held in a segregated client account at KSFCO to protect customers.

How does KSFCO manage the margins posted by Clearing Members? 

Q. How does KSFCO manage the margins posted by Clearing Members? 

KSFCO can invest its operating asset only in governmental and quasi-sovereign securities which are regarded risk-free securities in order to protect Members'customers

What are the rules related to additional margin? 

Q. What are the rules related to additional margin? 

If a customer margin deposit falls below the maintenance margin requirement, a Member will impose additional margin on the customer.
The customer must deposit the additional margin with her/his Member by noon of next day.
If she/he does not make the payment, the Member may liquidate her/his positions without any prior notice.

What is preliminary margin and what is the difference between initial and preliminary margin?

Q. What is preliminary margin and what is the difference between initial and preliminary margin?  

The preliminary margin is the amount a customer must deposit with Members before placing an order.
After the order is executed, the customer can withdraw the difference between preliminary and initial margin at any time.
If a Member collected margin after a customer placed an order, the default risk of the Member's customer would increase.
KRX tries to reduce this kind of risk. it manages all risks conservatively to protect all customers, so it had adopted the preliminary margin policy

What are the rules concerning the calling of intraday margin? 

Q. What are the rules concerning the calling of intraday margin? 

When KRX decides that the intraday margin is necessary due to abnormal price movement in the market, it can impose the intraday margin on Members.
This requires Members to deposit the required margin within 2 hours.
If they are unable to make the deposit, KRX may liquidate the open positions of their proprietary accounts without any prior notice.

Are there any tax issues that foreign clients need to be aware of?

Q. Are there any tax issues that foreign clients need to be aware of?

The US has a tax treaty with Korean government. There is 20% tax on interest income from the excess cash margin. This is the only withholding tax in Korea .

What is choice of law?

Q. What is choice of law?

Korean law is applied.

Please explain the due dates for margin deposit.

Q. Please explain the due dates for margin deposit.

KRX adapts pre-margin system. That means clients are asked to put enough margin to place orders. In case of margin call, you will need to remit additional margin requirements by 12:00PM (Korean Time) of the next day.

How settlement prices are calculated?

Q. How settlement prices are calculated?

Settlement periods are last 1 minutes of the trading. (PM 2:59 - 3:00 , Korean Time) Settlement Price is a weighted average of executions during settlement periods. In KTB, final settlement is translated form the settlement yields obtained from the last trading day.

How is collateral posted?

Q. How is collateral posted?

You can use stocks listed in KSE, Korea Treasury Bonds and corporate bonds listed in KSE (usable securities). Values of usable securities are according to KSE.

Will Samsung Futures agree to New York business days?

Q. Will Samsung Futures agree to New York business days?

No. Your are asked to follow market business days of Korea .