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Korea to Probe Sales of Product That Risks Big Losses

  • Investors could lose 95.1% of principal in one product: FSS
  • Woori, Hana Bank were big sellers; to cooperate with probe
Trading Inside Frankfurt Stock Exchange On Stock Watchers "Day From Hell"
Photographer: Alex Kraus/Bloomberg
Updated on

South Korean financial regulators will start a probe into sales of derivative products that carry the risk of individual investors losing almost all their money depending on moves in overseas market rates.

Those products include 127 billion won ($105 million) of securities tied to the German 10-year government bond yield, according to a statement from the Financial Supervisory Service. While they offer high returns if the German yield stays above a certain level, the securities expose investors to losses that increase as the yield falls more and more below that level.