Domestic securities houses in Korea have recently executed the first equity-linked notes onshore after receiving licenses to trade the products. "The first weeks have been very encouraging," said Hong Shik Kim, head of proprietary trading and derivatives at Good Morning Shinhan Securities in Seoul. He added that notes encompassing knock-out call options on the KOSPI 200 index are proving popular with retail investors and that over USD200 million has been sold in the past few weeks. Kim said that for the more exotic notes, domestic houses are hedging the over-the-counter options with international players. Typical notes range from USD10-50 million.
Six domestic firms including Good Morning, Dongwon Securities and Samsung Securities recently received the first batch of licenses to offer the products as part of further deregulation for the nascent onshore market which began late last year (DW, 9/22). "This market will grow rapidly," said B.J. Kim, executive v.p. at Dongwon in Seoul. Equity officials at Samsung declined comment.
