◆ A Liquidity Contributor (LC) is a system in which institutions are designated to submit quotes for low-liquidity securities, and incentives are provided based on their actual contribution to market liquidity.


LCs effectively serve a similar function to market makers and liquidity providers. By narrowing bid-ask spreads, they enhance price discovery and reduce transaction costs, thereby improving the overall efficiency of the derivatives market.


However, unlike market makers who are legally obligated, LCs are contractually required to submit quotes and receive incentives accordingly, without a statutory mandate.


The Korea Exchange is currently seeking to introduce the LC system in line with the broader opening of South Korea's capital markets. The initiative aims to boost trading activity in new markets such as extended-hours government bond futures and KOSDAQ 150 weekly options. Participating institutions can gain a first-mover advantage by capturing new profit opportunities in these emerging markets.


(Seoul=Yonhap Infomax) Yo Been Noh

(End)

© Yonhap Infomax. All rights reserved. Unauthorized reproduction or redistribution, as well as AI training and utilization, are strictly prohibited.

All content has been translated by AI.
Copyright © Yonhap Infomax Unauthorized reproduction and redistribution prohibited.