Outstanding Balance of Derivative-Linked Securities, Notes in South Korea Hits 96.7 Trillion Won, Highest in Three Years
Summary
- The outstanding balance of derivative-linked securities and notes reached 96.7 trillion won in the first half, the highest level in three years.
- First-half issuance rose to 42.9 trillion won, with ELS, DLS, ELB and DLB all posting sharp increases from a year earlier.
- The annualized investment return on products redeemed early or at maturity in the first half was 6.8% for derivative-linked securities and 3.6% for derivative-linked notes.
Forecast Trend Report by Period
The outstanding balance of derivative-linked securities and derivative-linked notes in South Korea climbed to nearly 100 trillion won in the first half, reaching its highest level in three years, as gains in domestic and global stock markets revived demand for the products.
The balance stood at 96.7 trillion won at the end of June, according to the Financial Supervisory Service's report on first-half 2026 issuance and management of derivative-linked securities and notes released on Oct. 2. That marked the largest amount since 96.3 trillion won at the end of June 2023.
Total issuance in the first half rose 26.2% from a year earlier to 42.9 trillion won. Issuance of derivative-linked securities, including equity-linked securities, or ELS, and other derivative-linked securities, or DLS, increased 21.2% to 14.3 trillion won, led by expanded sales of single-stock ELS.
Issuance of derivative-linked notes, which include equity-linked bonds, or ELB, and other derivative-linked bonds, or DLB, rose 28.8% from a year earlier to 28.6 trillion won. Demand expanded especially for ELBs.
Redemptions also surged. Redemptions of derivative-linked securities and notes in the first half rose 47.3% from a year earlier to 41.7 trillion won. More products met early redemption conditions as domestic and overseas stock indexes climbed, while maturity redemptions of derivative-linked notes also increased. Redemptions of derivative-linked securities rose 42.2% to 14.5 trillion won, and those of derivative-linked notes increased 50.3% to 27.2 trillion won.
By underlying asset, index-type ELS accounted for the largest issuance at 8.1 trillion won. Single-stock products totaled 3 trillion won and mixed-type products 1 trillion won. Among index-type ELS, products using the Kospi 200 as the underlying asset accounted for 84.6%.
Within single-stock ELS, products tied to individual shares offering relatively high yields proved especially popular. Issuance of products linked to Samsung Electronics totaled 1.3 trillion won, the most among individual names, followed by Tesla at 1.2 trillion won, SK Hynix at 1.1 trillion won and Palantir at 900 billion won.
ELBs were dominated by single-stock products. Issuance of single-stock ELBs reached 10.7 trillion won, far exceeding 4.2 trillion won for index-type products and 400 billion won for mixed-type products.
Among derivative-linked securities, knock-in products totaled 7.6 trillion won, or 53.1% of the total. No-knock-in products stood at 6.7 trillion won, or 46.9%. Within knock-in products, low-knock-in structures with lower loss-entry thresholds accounted for 98.7%.
The annualized investment return on products redeemed early or at maturity in the first half was 6.8% for derivative-linked securities and 3.6% for derivative-linked notes. Returns on derivative-linked securities rose from 6.3% a year earlier, while returns on derivative-linked notes were unchanged. By product, returns were 7.8% for ELS, 2.0% for DLS, 3.6% for ELB and 3.6% for DLB.
