Derivative-Linked Securities Issuance Reaches 34 Trillion Won in First Half, Up 7 Trillion Won Year-on-Year

Financial Supervisory Service Announces Issuance and Management Status of Derivative-Linked Securities by Securities Firms for H1 2025
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In the first half of this year, the issuance of derivative-linked securities reached 34 trillion won, an increase of nearly 7 trillion won compared to the same period last year. This was due in part to a recovery in demand for Equity-Linked Securities (ELS) investments, following a rise in both domestic and international stock markets and interest rate cuts.

According to the Financial Supervisory Service on September 24, the issuance of derivative-linked securities in the first half of the year amounted to 34 trillion won, up 6.5 trillion won from the same period last year. The redemption amount was 26.1 trillion won, a decrease of 13.3 trillion won. The outstanding balance stood at 87.2 trillion won, an increase of 5.7 trillion won from 81.6 trillion won at the end of last year.

By product type, the issuance of Equity-Linked Securities (ELS) was 21.7 trillion won, an increase of 3.5 trillion won (16%) from the same period last year. Demand for ELS investments partially recovered due to rising stock markets at home and abroad and lower interest rates. Of this, the proportion of non-principal-protected products was 46.5%, and public offerings accounted for 84%.

By underlying asset, index-type ELS issuance was 11.3 trillion won, up 2.1 trillion won year-on-year. Stock-type ELS also increased by 1.2 trillion won to 9.2 trillion won. By major underlying asset, KOSPI200 accounted for 8.9 trillion won, followed by S&P500 (8 trillion won), EuroStoxx50 (7.2 trillion won), and Nikkei225 (2.7 trillion won).

The Financial Supervisory Service explained, "Demand for ELS products linked to overseas indices increased due to greater volatility in global stock markets," adding, "The proportion of overseas indices rose, while the share of KOSPI200 declined slightly."

The issuance of other derivative-linked securities (DLS) was 12.3 trillion won, up 3 trillion won from the same period last year. Of this, principal-protected DLS issuance rose by 3.2 trillion won to 10.6 trillion won. This is attributed to the advantage of being able to expect returns above deposit products while maintaining stability in a low-interest-rate environment.

By underlying asset, interest rates accounted for the largest share at 9.6 trillion won, followed by credit (1.2 trillion won), exchange rates (860 billion won), and others (480 billion won).

In the first half of this year, the ELS investment return rate was 5.3%, up 12.6 percentage points from the same period last year. DLS returns also increased by 1.3 percentage points to 3.3%. As most ELS products linked to the H index were redeemed last year, ELS investment returns shifted from losses to gains.

The issuance of knock-in derivative-linked securities amounted to 434.1 billion won, accounting for 0.5% of the total. As most H index-linked ELS were redeemed last year, the proportion as of the end of June this year was 0.5%, a slight decrease from 0.8% in the same period last year.

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