South Korea's over-the-counter (OTC) derivatives trading volume reached a record high of nearly 26,800 trillion won last year, driven by growing foreign exchange hedging demand amid rising foreign trade and currency volatility.
According to the "2025 Financial Companies' OTC Derivatives Trading Status" released by the Financial Supervisory Service (FSS) on Tuesday, the OTC derivatives trading volume of domestic financial companies totaled 26,779 trillion won last year, up 1.2% from the previous year. OTC derivatives trading volume has been on an upward trend every year, reaching 24,704 trillion won in 2023 and 26,461 trillion won in 2024.
By underlying asset, currency-related transactions were the largest at 19,778 trillion won, accounting for 73.9% of the total. Among these, currency forward transactions took the largest share at 18,517 trillion won, or 69.1%. A currency forward refers to a contract to buy or sell a specific currency at a predetermined price at a future date.
Interest rate-related transactions followed at 6,215 trillion won (23.2%), equity-related transactions at 634 trillion won (2.4%), and credit-related transactions at 40 trillion won (0.2%). While equity-related transactions accounted for a small share of the total, they recorded the highest growth rate, rising 35.2% from the previous year.
The FSS attributed the increase in trading to growing hedging demand amid expanding foreign trade, exchange rate volatility, and heightened stock market volatility.
Derivatives are financial instruments whose value is determined by changes in the value of underlying financial assets such as currencies, bonds, and stocks. They are mainly used by financial companies and institutional investors to manage price volatility risks or credit risks of financial instruments including stocks, bonds, and currencies.
