South Korea Financial Supervisory Service reports first quarter derivatives linked issuance of KRW19.6 trillion as redemptions rise above new sales

The South Korea Financial Supervisory Service published first quarter 2026 data on derivatives-linked securities and bonds showing issuance of KRW19.6 trillion, up KRW3.8 trillion or 24.1% from a year earlier. Redemptions rose faster, increasing KRW7.9 trillion or 62.2% year on year to KRW20.6 trillion. As a result, the outstanding balance at the end of March 2026 fell to KRW93.5 trillion, down KRW1.6 trillion or 1.7% from the end of December 2025. Issuance remained weighted toward derivatives-linked bonds, which totaled KRW12.9 trillion in the quarter, while derivatives-linked securities accounted for KRW6.7 trillion. Within equity-linked products, index-type ELS issuance reached KRW3.8 trillion, while stock-type ELB issuance was the largest ELB segment at KRW5.1 trillion. Among derivatives-linked securities, knock-in products represented 49.3% of issuance, with 97.0% of those carrying a knock-in barrier of 50% or below, while no knock-in products made up 50.7%. Securities companies underwrote KRW3.5 trillion of derivatives-linked securities and KRW4.9 trillion of derivatives-linked bonds, compared with KRW0.9 trillion and KRW3.5 trillion for banks respectively, and retirement pension plans accounted for KRW2.5 trillion of bond underwriting. Annualized returns on redeemed derivatives-linked securities rose to 6.8% from 6.6% a year earlier, while returns on redeemed derivatives-linked bonds fell to 3.5% from 4.4%, with ELS posting the highest return at 8.3%.