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Sales of derivatives-tied securities dip in 2020 – Yonhap News

SEOUL, April 27 (Yonhap) — Sales of derivatives-linked securities in South Korea dropped 30.3 percent on year in 2020, partly due lower demand following the misselling of derivatives-linked funds, data showed Tuesday.

The combined value of equity-linked securities (ELS) and derivatives-linked securities (DLS) issued last year came to 91.3 trillion won (US$82 billion), down 39.7 trillion won from a year ago, according to the data from the Financial Supervisory Service.

The products are structured to track the performance of underlying assets, not guarantee the principle, as investors prefer instruments that promise higher yields.

The FSS said the misselling of derivatives linked to overseas interest rates is to blame for declines in sales of derivatives-tied securities.

The issuance of ELS products fell by 30.9 trillion won to 69 trillion won last year.

ELS refers to hybrid debt securities whose returns are determined by the performance of underlying equities. ELS products track benchmark stock indexes, including the Korea Composite Stock Price Index 200.

Sales of DLS instruments, which track interest rates, currency values and other underlying assets, declined by 6.8 trillion won to 22.3 trillion won in 2020.