Banks advised to enhance risk management on surging ETF sales

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watchdog-ETF sales

Banks advised to enhance risk management on surging ETF sales

SEOUL, April 9 (Yonhap) -- The country's financial watchdog called on local lenders Thursday to heighten their risk management for exchange-traded funds (ETFs) and prevent the misselling of such products amid a recent surge in sales of the financial products.

The Financial Supervisory Service (FSS) said sales of ETFs by banks to their customers have been on a sharp rise in tandem with a bull run on the local stock market.

The banks' combined ETF sales amounted to 15.1 trillion won (US$10.2 billion) in the first two months of the year, over three times higher than the 4.9 trillion won tallied over the first six months of last year, according to the FSS.

The local stock market, however, recently saw large fluctuations due to the conflict in the Middle East, exposing underlying assets for the financial products to severe volatility.

The financial watchdog stressed that banks need to well inform their customers of potential risks tied to the ETF products and also heighten their internal control.

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