An equity-linked warrant (ELW) ad by Korea Investment & Securities Co. is a hot topic in the industry. It stands out for using artificial intelligence (AI)-generated videos and for putting front and center high-multiple leverage that goes beyond the typical two to three times.
According to the financial investment industry on the 12th, Korea Investment & Securities Co. has run a YouTube channel dedicated to equity-linked warrants (ELWs) since June last year. Content using memes aimed at people in their 20s and 30s and AI-generated videos is drawing high view counts.
An ELW is securities that grant the right to buy the underlying asset at a set price (strike price). Although it is a derivative, it can be traded in real time like a stock, and even a small amount of money can generate high-multiple leverage, making it a preferred investment vehicle. However, due to structural characteristics in which principal losses can occur rapidly depending on price fluctuations, it is classified as a representative high-risk, high-complexity product.
But concerns are being raised that the ELW promotion for a high-risk product is excessively aggressive. An industry official said, "Videos featuring older adults as models may appear inappropriate as ads for a high-risk product."
According to the Korea Financial Investment Association, video ads also must be reviewed by a compliance officer or the association, but if the YouTube channel is the company's own channel, the compliance officer is set to conduct the review.
A Korea Financial Investment Association official said, "If it is a video on the company's own channel, it only needs to go through a compliance officer's review." In addition, under the Basic AI Act, for videos produced with AI, notifying viewers that they were generated by AI does not violate the rules.
Analysts say Korea Investment & Securities Co.'s turn to aggressive promotion reflects the ELW market's predicament on the brink.
The ELW market has shrunk rapidly as regulators continued to roll out measures since the 2010s, when they released plans to normalize the market. Even in 2010, the average daily transaction value reached 1.637 trillion won, but last year it shrank to 91.0 billion won. However, as the domestic stock market turned buoyant this year, supported by leveraged investing, the average daily transaction value has risen to 177.0 billion won.
Korea Investment & Securities Co. is also the only securities firm currently issuing ELWs. According to Korea Investment & Securities Co., the YouTube account in question is also run not by the existing advertising department but by the ELW team.