SK Regulator To Quiz 12 Banks Over Sales Of HK Derivatives

The financial regulator has announced that it will launch an investigation into the sales of derivative products tracking Chinese stocks listed on the Hong Kong exchange.

The FSS has conducted a preliminary review of sales of H index-based ELS products after complaints had been filed against at least the two largest sellers of the ELS products—KB Kookmin Bank and Korea Investment & Securities Co. I Photo: Wikiwater2020 Wikimedia Commons

Concerns have been raised that such products could put investors at risk of heavy losses, as reported by Yonhap News Agency.

The inspection into 12 local banks and brokerages began on Monday, according to the Financial Supervisory Service (FSS). The five banks and seven brokerages have sold a combined 19.3 trillion won (US$14.68 billion) worth of so-called equity-linked securities (ELS) products tracking Hong Kong's H index since 2021, the FSS said.

ELS refers to hybrid securities whose returns are linked to the performance of underlying equities, including a stock index.

Of the total outstanding amount, 79.6%, or some 15.4 trillion won, worth of products will be redeemed in the first half of this year, but they are expected to post heavy losses due to poor performances by the H index, according to the FSS.

The FSS has conducted a preliminary review of sales of H index-based ELS products after complaints had been filed against at least the two largest sellers of the ELS products—KB Kookmin Bank and Korea Investment & Securities Co.

WEEKLY FEATURE : Jose Mari Chan And The Christmas Anthem