Latest FSC crackdown decimates South Korean equity-linked warrants market
New rules on liquidity provider quotation thresholds see spreads widen and equity-linked warrants turnover plummet by more than 90%, leading investors to look offshore
The equity-linked warrants (ELW) market in South Korea has been the subject of several regulatory changes in the past year, but the latest measures, put in place on March 12, have triggered a sharp fall in turnover of more than 90% after slashing liquidity providers' market-making power.
"The regulator wanted to implement measures that would protect retail investors amid its concern that the ELW market was overheated," says a Seoul-based lawyer. "The last measure implemented had the most
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