'Ant Bitten by ELS' First Half Redemption Down 66%... Issuance Also Plummets

[Asia Economy Reporter Ji Yeon-jin] Due to the sharp market decline in the first half of this year, the redemption of derivative-linked securities (ELS+DLS) was delayed, significantly dampening market sentiment.

According to the status of issuance and operation of derivative-linked securities by securities companies in the first half of this year, announced by the Financial Supervisory Service on the 14th, the issuance amount of derivative-linked securities during this period was 29.3 trillion won, down 15.7 trillion won (34.9%) from 45 trillion won in the same period last year. During the same period, the redemption amount was 34.6 trillion won, a decrease of 66.3% (34.6 trillion won).

As redemptions were extended due to the index decline, the redemption amount fell below the issuance amount, and the outstanding balance at the end of the first half of this year was 94.9 trillion won, down 10.2 trillion won from 84.7 trillion won a year earlier.

ELS issuance amounted to 23.6 trillion won, a decrease of 33.7% (12 trillion won) compared to the same period last year. Principal-guaranteed issuance was 5.5 trillion won, down 66.0% from the second half of last year. This was due to the concentration of retirement pension product issuance at the end of last year. Principal non-guaranteed issuance was 18.1 trillion won, down 10.8 trillion won (37.3%) compared to the same period last year. The Financial Supervisory Service explained that the main reason was a decrease in investment demand due to the decline in ELS underlying indices.

In particular, the issuance amount of index-type ELS was 17.6 trillion won, down 36.7%, and its share also decreased by 3.6 percentage points to 74.4%. The issuance amount of stock/mixed-type ELS recorded 6 trillion won, down 25.6%. The issuance amount of ELS with three underlying assets was the highest at 13.8 trillion won, and its share decreased by 8.9 percentage points to 58.5% compared to the same period last year.

The issuance scale by underlying assets was led by Euro Stoxx (16.1 trillion won), Standard & Poor's (S&P) 500 (16 trillion won), KOSPI 200 (9.4 trillion won), and Hong Kong H Index (3.9 trillion won).

During this period, ELS redemption amounted to 12.9 trillion won, down 69.7% compared to the same period last year. This is a 59% decrease compared to the second half of last year. As of the end of June this year, the outstanding balance of ELS issuance was 66.8 trillion won, an increase of 25.3% compared to a year ago.

In the first half of this year, DLS issuance amounted to 5.7 trillion won, down 40% compared to the same period last year. The Financial Supervisory Service explained that the decrease in DLS issuance is due to the expansion of volatility in the bond market, contraction of the foreign currency funding market, and the prohibition of blanket registration for principal non-guaranteed DLS.

During this period, DLS redemption amounted to 4.7 trillion won, down 51.0%, and as of the end of June, the outstanding balance of DLS issuance was 28 trillion won, up 4.1%.

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