By Park Hyong-ki
Staff Reporter
Macquarie Securities Korea introduced its four equity linked warrants (ELWs) on Tuesday, becoming the first foreign brokerage house to list ELWs on the Korea Exchange (KRX).
The inaugural products are the Macquarie 7001 POSCO CALL, the Macquarie 7002 HYNIX CALL, the Macquarie 7003 KOSPI200 CALL and the Macquarie 7004 KOSPI200 PUT. They will make their trading debut on July 11.
``ELWs are a win-win product _ there is no minimum investment amount and there is no other easy way for investors to obtain leverage over shares,'' said Yoo Ji-eun, head of Macquarie's ELW sales and marketing, at a press conference.
The Korean subsidiary of Macquarie Bank, an Australia-based investment bank, said it sees potential in Korea's derivatives market as it has grown rapidly over the years and now ranks as the world's fourth largest.
The trading volume of ELWs averaged 307 billion won a day in the first six months of this year, up 65 percent from last year, making Korea Asia's second biggest derivatives market after Hong Kong, according to the KRX.
As of July 11, a total of 2,035 ELW products, including the four from Macquarie, are listed on the KRX, up from a mere 72 when the derivatives market opened to investors in 2005.
In keeping with the stellar growth, the head of the securities company said it will issue many more ELWs and other derivatives products in the future as this market has the potential to grow faster than Hong Kong to reach as high as 100 trillion won.
It also hopes to list them overseas in Hong Kong or Japan. However, the current securities law forbids brokerages to list ELW products on overseas equity market.
``It's a work in progress, and we're discussing the possibility with the KRX for overseas listing,'' said Ross Gregory, head of the equity markets group for Macquarie.
Its introduction of four ELWs came after the company obtained a license from the Financial Supervisory Commission in March.
Gregory said that regulators need to ease rules governing the trading of ELWs by liquidity providers to further boost the ELW market and reduce volatility. There's a need to ease regulations on restrictions on the trading of ELWs by liquidity providers ahead of ELW maturity, said Gregory.
He welcomed the Capital Market Consolidation Act, adding that with the act, the company plans to expand in retail services and business with other financial firms in providing a wide range of products to consumers.