Several banks in South Korea have implemented schemes to compensate investors facing losses from yield enhancement products linked to the Chinese market, following warnings from domestic regulators on the lack of suitability checks at the point of sale.

KB Kookmin Bank has outlined an investor compensation plan for investors’ financial losses tied to equity-linked securities (ELS) linked to the Hang Seng China Enterprises Index (HSCEI). 

This latest development came just over two weeks after the Financial Supervisory Service (FSS) released the results of its product mis-selling probe, as well as draft dispute resolution standards to resolve the disputes between sellers and investors. 

In a statement released last Friday (29 March), the bank said it will apply mutatis mutandis to the financial watchdog’s dispute resolution standards. 

The targeted amount earmarked for compensation includes those with confirmed loss account (accounts with confirmed loss due to repayment at maturity), cases where losses occur among accounts that have not yet reached maturity, or accounts that incurred losses due to early cancellation after subscription, according to KB Kookmin Bank. 

KB Kookmin Bank said it will also form a self-adjustment council with experts on related laws, such as financial products and consumer protection policies, to decide the compensation amount for each impacted investor. The compensation is scheduled to be paid after the investor consents to payment.

Other banks, such as Hana Bank, Woori Bank, Shinhan Bank and Standard Chartered Bank Korea, all agreed to compensate impacted investors, local media reported. 

Following a two-month on-site inception among 11 banks and brokerage houses including KB Kookmin Bank, the FSS' latest investigation revealed that multiple mi-selling issues on HSCEI-linked ELS products, causing investors’ loss. The Korean financial watchdog estimated that such losses could reach KRW 5.8 trillion (US$4.4 billion) this year if the index remains at the current level. 

As the deadline for first quarter earnings results approaches, Fitch Ratings warned last month that the FSS-issued compensation guidance ‘will likely weaken bank earnings and profitability’

First Nasdaq-100 ETF powered by a daily call options strategy debuts

ProShares has launched the ProShares Nasdaq-100 High Income ETF (Nasdaq: IQQQ) a new tracker fund for investors seeking to target Nasdaq-100 returns over the long term.

The new IQQQ ETF tracks the performance of the Nasdaq-100 Daily Covered Call Index, an index designed to replicate the performance of an investment strategy that combines a long position in the Nasdaq-100 index with a short position in Nasdaq-100 index call options.

The index replicates a daily covered call strategy that sells call options with one day to expiration each day. The IQQQ ETF invests in Nasdaq-100 stocks and uses swap agreements to gain exposure to daily call options.

'Many investors seeking income have added covered call ETFs to their portfolios. However, conventional covered call ETFs often sacrifice total return to generate high income,' said ProShares CEO Michael L. Sapir (pictured), adding that with the new ETF powered by a daily call options strategy, 'offers investors both the potential for high income and a long-term total return approximating that of the Nasdaq-100'.

ProShares pioneered the use of a daily call options strategy in an ETF with ProShares S&P 500 High Income ETF (ISPY), launched in December 2023.

Erste lists product in Germany's Easy Euwax trading segment

Erste Group is listing its structured securities as an issuer in the Easy Euwax trading segment of Boerse Stuttgart Group. The Austrian banking corporation said no exchange transaction fees will be charged for the approximately 3,100 leverage and investment products of Erste Group listed on Easy Euwax.

'With Easy Euwax, investors benefit from high exchange trading quality and transparency at no exchange transaction fees,' said Dragan Radanovic (right), chief business officer of Boerse Stuttgart Group.

'Through this low-cost and reliable offering, we are strengthening exchange trading in structured securities – together with the issuers as our partners.'

Radanovic added that the independent Trading Surveillance Office monitors price fixing and transaction settlement for exchange trading in the Easy Euwax segment which provides investors with additional transparency ratios on the listed products as well as search features to make it easier to select products.

'Providing transparency regarding the traded prices of our products, and doing so at lower costs, is important to us,' said Uwe Kolar, head of retail and sparkassen sales at Erste Group.

Easy Euwax was launched as an exchange-based zero-fee segment to complement the Euwax segment of Boerse Stuttgart Group for structured securities trading and is open to all issuers. Morgan Stanley was the first issuer to list its products in Easy Euwax, followed by Raiffeisen Bank International - in total, the trading segment now comprises around 326,000 leverage and investment products on a variety of underlyings.

New EIBOR-linked cap-prot investment scheme launches in UAE

National Bonds, wholly owned by the Investment Corporation of Dubai, has launched a new capital-protected investment scheme.

The company's EIBOR Plus provides 'a secure and adaptable investment option', with its pricing model automatically adjusting quarterly to reflect the central bank’s Emirates Interbank Offered Rate (EIBOR), the company said in a statement.

The expected return on the scheme will be 0.5% above the EIBOR on an annual basis – investors will receive 5.8% per annum if the Three-month EIBOR rate is 5.3% pa. The profit payout will be quarterly in line with EIBOR rates.

'As the UAE’s economy flourishes, we will continue to develop innovative programs and creative solutions to cater to the diverse financial needs of the UAE’s population,” said Rehab Lootah (right), deputy group CEO of National Bonds.

The minimum investment is 25,000 UAE dirhams ($6807.54), with investment terms spanning from six to 36 months.

Leverage Shares expands long/short ETP range

Exchange-traded products (ETPs) issuer Leverage Shares has brought to market eight new leveraged ETPs on the London Stock Exchange (LSE). These new ETPs are aimed at professional investors seeking leveraged exposure to a number of "very popular indices and stocks, catering to the diverse needs of both retail and institutional investors".

The newly listed ETP range includes several firsts for the London Stock Exchange and comprises 4x long and 4x short ETPs linked to the NYSE Semiconductor index; 5x long and -3x short exposure to the Magnificent 7 index; 3x and -3x leveraged basket of leading Artificial Intelligence (AI) stocks, featuring prominent names such as NVDA, META, PLTR, QCOM, and INTC; as well as new ETPs offering leveraged exposure to popular single stocks such as IONQ and Super Micro Computer (SMCI).

'This launch underscores our commitment to delivering innovative and competitively priced ETPs to the market— we are committed to gear sophisticated investors with the tools necessary to invest with conviction,' said Oktay Kavrak (right), director of strategy at Leverage Shares.

One of the special features of Leverage Shares’ ETPs is that they are physically backed which means the ETPs physically own the underlying instruments and no swaps or derivatives are used to gain exposure.

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