Korea’s Financial Services Commission
(FSC) must tackle offshore exchange-traded fund (ETF)
manipulation, as trading irregularities grow, according to
counsel in the country.
For the first time since launching its
exchange-traded-fund market in 2002, the regulator has stepped
into the fray, with an initiative to offer tax incentives to
ETFs that track foreign stock market indices and allow the
National Pension Service to buy domestic ETFs.
But the increasing prevalence of offshore ETF
irregularities, notably China-indexed ETFs, resulting in
inflated prices, has led to widening discrepancies between the
market price of offshore ETFs and their net asset value.
"An abnormal surge of 14% in the price of Chinese leveraged
ETFs, which has far exceeded Korea’s statutory
limit of 6% for offshore ETFs has raised the red flag for the
authorities," said Jae Ho Baek, attorney at Kim...