Korean issuers of equity-linked securities are being hit with large invoices for licence fees for using Standard and Poor's indices as underlyings, according to local press reports.
SRP confirms that over 80 S&P-linked products were launched in the second half of 2010, including 43 in October.
According to Tong Yang Securities, ELS products linked to S&P500 have increased significantly, from KRW5.4bn ($4.9m) in July 2010 to representing over KRW492.7bn ($442.8m) by the end of the year.
Beom Suk Kim, Korean director at S&P500, said he understands that there is some resistance by local firms who were perhaps unaware of the legal obligations they had to pay fees to use its indices. "We can consider tying up five to seven securities companies to create a comprehensive contract," he suggested to one news outlet.
The cost of using the S&P500 as an underlying for a publicly-offered structured product in the US and Europe was estimated by local sources to be around KRW12m ($10,784) to KRW15m ($13,480).