[2020 National Audit] Rep. Kim Byung-wook: Individual Investors' Overseas Derivatives Trading Losses... 880 Billion Won in the First Half of This Year

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[Asia Economy Reporter Eunmo Koo] It has been revealed that individual investors incurred losses close to 900 billion KRW by directly investing in overseas derivatives markets in the first half of this year. While individual investors' investments in overseas derivatives products have been increasing every year, there are no safety measures for investors, highlighting the need for improvements.

According to the "Status of Domestic Investors' Investments in Domestic and Overseas Derivatives" submitted by the Financial Supervisory Service to Kim Byung-wook, the senior member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, losses incurred by domestic individual investors from direct investments in overseas derivatives markets amounted to 880 billion KRW in the first half of this year alone.

Overseas derivatives transactions by domestic individual investors more than doubled from 1,959 trillion KRW in 2016 to 4,162 trillion KRW last year, while domestic derivatives transactions decreased from 2,663 trillion KRW to 2,519 trillion KRW during the same period. In the first half of this year, derivatives products worth 3,393 trillion KRW and 2,020 trillion KRW were traded overseas and domestically, respectively.

As overseas derivatives transactions increase, related losses are also on the rise. From 2016 to the first half of this year, individual investors' losses from overseas derivatives trading were 246.5 billion KRW in 2016, 224.4 billion KRW in 2017, 782.3 billion KRW in 2018, and 415.9 billion KRW in 2019, showing a continuous loss trend.

Assemblyman Kim Byung-wook emphasized, "When domestic individual investors trade in the domestic derivatives market, they are subject to mandatory pre-education, simulated trading, and a basic deposit system, but there are no institutional measures for overseas derivatives market trading. As direct investments in overseas derivatives by individual investors have rapidly increased and loss rates have significantly risen, it is necessary to manage risks through pre-education on derivatives products."

This content was produced with the assistance of AI translation services.