financial watchdog-high-risk products

FSS warns investors' against rushing to high-risk products amid market volatility

SEOUL, March 18 (Yonhap) -- The financial watchdog on Wednesday warned retail investors against rushing to buy high-risk financial products amid increased market volatility.

According to the Financial Supervisory Service (FSS), the daily average turnover of leveraged and inverse exchange traded products (ETPs) has amounted to 5.6 trillion won (US$3.77 billion) so far this year through March 10, a sharp rise from 1.6 trillion won during the same period of last year.

The FSS said the market capitalization of such products stood at 21.7 trillion won, also sharply up from 12.4 trillion won at the end of last year.

A leveraged ETF is designed to amplify the daily returns of an underlying asset by using financial derivatives and debts, and an inverse ETF is made to perform the opposite of a specific index or benchmark.

The watchdog said investors have been seeking to bask in huge gains by trading leveraged or inverse ETPs by capitalizing on the extreme market rout caused by the extended crisis in the Middle East.

The watchdog said retail investors should be cautious in trading such products as they face potentially huge losses in the short term.

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