Korea’s interbank foreign exchange markets achieved record turnover in the quarter ended 30 June 2007 due to increased transactions of FX swaps and derivatives by foreign FX brokers, according to a government website citing the country’s central bank. Average daily trading volume reached $17.3 billion in the quarter, up 26.3% from the previous quarter, according to the Bank of Korea (BOK). “Foreign exchange swaps and derivatives trading surged as four foreign inter-dealers actively engaged in business in the local currency market,” says the central bank. Four global FX brokerages were issued with licenses to operate in Korea this year, including GFI, Nittan Capital, Tradition, and BGC (see Squawkbox May 7, 2007). Meanwhile, foreign banks in Korea nearly doubled their earnings in fiscal 2006 compared to a year ago, according to Korea’s Financial Supervisory Service (FSS). The combined net profit of 33 foreign bank branches reached KRW 278.5 billion ($303 million) in the year ended March 31, up 85.9% from a year earlier. Non-interest income surged 227% to a combined KRW690.4 billion The local branch of HSBC reported the largest net profit of KRW54.4 billion, followed by State Street with KRW38.9 billion. In other developments, Korea’s Ministry of Finance and Economy has unveiled plans to develop the country as a financial hub. Proposed measures include tax incentives to stimulate mergers and acquisitions among financial companies, and to form large-scale investment banks. Regulations on private equity and hedge funds will also be eased over time.