2021 Global ETP Conference Held... "Exploring Various Product Supply Strategies"

Son Byung-du, Chairman of Korea Exchange, "Qualitative Growth Such as Ecosystem Diversification Is Important"
Considering Institutional Improvements Including Delays in Disclosure of Investment Item Information or Opaque ETFs

Son Byung-doo, Chairman of the Korea Exchange, is delivering the opening speech at the 2021 Global ETP Conference in Seoul. (Provided by Korea Exchange)

[Asia Economy Reporter Gong Byung-sun] The Korea Exchange is exploring ways to supply various products, including active exchange-traded funds (ETFs), to the exchange-traded product (ETP) market. It also stated that it is considering mid- to long-term options for opaque ETFs that delay the disclosure of investment item information (PDF) or do not disclose information at all.

On the 9th, the Korea Exchange held the "2021 Global ETP Conference" event at its Yeouido headquarters. Now in its 11th year, this event is an international conference representing the Asian ETP market, providing an opportunity to share the latest global market trends and investment strategies by inviting representatives from domestic and international ETP industries.

ETPs include ETFs and exchange-traded notes (ETNs). Since the first listing of four ETFs in October 2002, the Korea Exchange's ETF market has grown at an average annual rate of 30% in asset size. As of the end of September this year, the number of listed ETFs was 507, with a total net asset value of 63.6 trillion KRW and an average daily trading volume of 3 trillion KRW.

ETNs have also grown annually since their introduction in November 2014. As of the end of September this year, the number of listed ETNs was 219, with a total net indicative value of 8.1 trillion KRW and an average daily trading volume of 38.5 billion KRW.

At the event, Son Byung-du, Chairman of the Korea Exchange, emphasized that as the domestic ETP market has achieved quantitative growth, qualitative growth is also important. Chairman Son said, "We need to diversify the ecosystem that is concentrated on popular items," adding, "We should leverage the advantages of ETFs, which allow for diversified investment and pursuit of medium-risk, medium-return."

He also stressed, "Because product structures are complex, more focus should be placed on investor protection education," and emphasized, "It is essential to recognize the risks of derivative products such as leveraged or inverse ETFs." Furthermore, he said, "We will focus on supplying various products that meet investors' demands," adding, "We plan to launch more products ranging from metaverse and overseas stock types to active ETFs, and will also accelerate the development of bond-type ETPs with fixed durations."

Park Jung-hoon, Standing Commissioner of the Financial Services Commission, emphasized that the active ETF market needs to grow further. An active ETF refers to a financial product where the fund manager directly constructs and actively manages the portfolio. Commissioner Park explained, "Active ETFs can add the advantage of generating excess returns on top of the existing benefits of ETFs," and said, "We are currently closely monitoring active ETFs and exploring various systems to facilitate the launch of more diverse active ETFs."

Song Young-hoon, Deputy General Manager of the Korea Exchange, argued that regulatory improvements are necessary for the development of the ETP market. Deputy General Manager Song said, "We are considering lowering the correlation coefficient threshold for active ETFs to below 0.7 and extending the delisting rule from failing to maintain the correlation coefficient for three consecutive months to six months."

Additionally, Deputy General Manager Song added that mid- to long-term reviews are underway for opaque ETFs that delay or do not disclose investment item information and active ETFs without correlation coefficients. However, regarding triple leverage, he stated, "There are no immediate plans, and it will only materialize after considering and supplementing various safety measures."

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