As volatility in commodity markets such as crude oil has increased due to the recent Middle East war, the Financial Supervisory Service urged investors to be mindful of widening price deviations when investing in related exchange-traded funds (ETF) and exchange-traded notes (ETN).
The Financial Supervisory Service (FSS) held a meeting with commodity market experts on the 12th, reviewed current volatility in commodity markets such as crude oil, and discussed the impact on Korea's capital markets and response measures.
Hwang Seon-o, deputy governor of the Financial Supervisory Service (FSS), said, "If the closure of the Strait of Hormuz is prolonged and disrupts crude oil supply, it could affect the real economy and financial markets overall," and urged securities firms and asset management companies to proactively examine and manage related risks.
In particular, Hwang emphasized the need to prevent investor harm by providing detailed guidance on the inherent characteristics of commodity investment products and the possibility of loss.
Commodity market experts who attended the meeting said that in situations where oil prices surge or plunge, the actual value and price of commodity ETFs and ETNs can temporarily diverge significantly. They also noted that for leveraged and inverse products, related loss risks can increase further in a short period.
The Financial Supervisory Service (FSS) plans to continuously monitor trends in the commodity market and the sale of related financial investment products, and, in close cooperation with the industry, carry out necessary investor protection measures without disruption.