The First Variance Future for the SKOFX

Online, February 7, 2014 (Newswire.com) - The SKOFX has announced that it had listed and begun trading on the first ever Variance Future on the exchange. With increasing demand for this type of financial instrument, this listing could be the forerunner of a new asset class at the South Korea Options and Futures Exchange.

A Variance Future is a complex derivative instrument used by asset managers, fund managers and hedge funds as a hedging and speculating tool against volatility.

Variance swaps or variance futures (also called variance contracts) are equity derivative instruments offering pure exposure to daily realized future variance. Variance is the square of volatility (usually denoted by the Greek symbol Delta). At expiration, the swap buyer receives a payoff equal to the difference between the annualized variance of logarithmic stock returns and the swap rate fixed at the outset of the contract. The swap rate (or delivery price) can be seen as the fixed leg of the swap and is chosen such that the contract has zero present value. In short, a variance swap is not really a swap at all but a forward contract on realized annualized variance.

SKOFX is at the forefront of developing world-class derivative instruments. "We are very proud of this listing - to our knowledge, only two other exchanges are known to have listed this type of instrument" comments Victor Rothberg, Derivative Specialist for the SKOFX Derivatives Trading Team. "With many other requests for Variance Futures, this listing is the first of a completely new asset class on the SKOFX."

South Korea Options and Futures Exchange (SKOFX) is one of the world's leading futures and options trading venues, with markets based in the Asia, US and Europe offering derivatives on commodities, FX, equities, bonds, interest rates, indices and swaps.

Its commercial technology division, SKOFX Technologies provides best-in-class transaction, data, and infrastructure management services and solutions.