Korean financial firms will face a new disclosure rule for high-risk investment products from September 30. The Financial Supervisory Service says firms launching leverage, inverse and other designated funds must tell investors the expected maximum loss rate. If the same type of product has previously suffered losses above 20%, that history must also appear in the investment explanation.
The standard covers 10 fund categories, including overseas real-estate funds, overseas REITs, ELF and DLF products, covered-call funds and leverage or inverse products. The change follows large losses in overseas real-estate funds and is meant to make product risk easier to understand before purchase.