Korean regulator allows synthetic ETFs

Issuance of South Korean ETFs to remain largely from local managers despite changes to allow synthetic ETFs

The decision by the Financial Services Commission (FSC) to allow synthetic ETFs in Korea is a positive move, but issuance of new synthetic ETFs will largely be from local ETF managers, says one ETF provider.

On February 26, the FSC announced that it had passed a revised bill that was submitted by the Korea Exchange (KRX) to trade synthetic ETFs on the local exchange. A synthetic ETF tracks the underlying investment via a derivative such as an interest rate swap with a counterparty, as opposed to