Challenges and Growth Needs of Korea's ETF and ETN Markets
The domestic active ETF market is showing slower growth compared to the global market due to regulatory environments and market structure issues. In the global market, the share of equity active ETFs is consistently increasing, while in Korea, bond and bond-mixed with derivative types dominate. To enhance asset management efficiency, there is a call for simplifying registration and listing review processes, as well as amending rules on correlation coefficient maintenance with benchmark indices.
Meanwhile, the domestic ETF market is thriving, reaching 250 trillion KRW, but the ETN market remains stagnant at 17 trillion KRW. While ETFs can be incorporated into retirement pension plans, ETNs are often sidelined due to credit risks and structural complexities. Most ETNs are leveraged or inverse products, resulting in high volatility. For the market to grow, both institutional enhancements and product diversification are deemed necessary.
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