The cumulative trading volume of "perpetual futures" based on Korean stocks and stock indices, such as SK Hynix and Samsung Electronics, on overseas cryptocurrency exchanges has surpassed 300 trillion won just six months after their launch. These are high-risk products that allow leverage of up to 200 times. As trading in domestic single-stock leverage ETFs (Exchange-Traded Funds) plummeted following the announcement of countermeasures, demand shifted to perpetual futures, raising concerns about further investor losses.
According to Web3 research and consulting firm Tiger Research on the 20th, the cumulative trading volume of Korean stock- and index-based perpetual futures products reached 307 trillion won from February to August this year. Considering that trading volume was around 100 billion won when related products launched in February last month, this represents rapid growth in just six months.
Unlike regular futures, perpetual futures are derivatives that can be traded without a fixed expiration date. Investors can bet on price increases or decreases and utilize leverage without directly holding the underlying asset. Currently, perpetual futures traded on overseas cryptocurrency exchanges are linked to underlying asset price fluctuations at multiples ranging from 10 times to a maximum of 200 times.
Analysis suggests that while products based on cryptocurrencies had previously dominated, demand grew following the launch of Korean stock-related perpetual futures products this year.
According to Eugene Investment & Securities, trading in Korean single-stock perpetual futures, excluding indices and ETFs, is centered on three stocks: SK Hynix, Samsung Electronics, and Hyundai Motor. Based on 11 major global cryptocurrency exchanges, the cumulative trading volume of products related to these three stocks reached $176 billion (approximately 233 trillion won) from February 19 to August 8. Among these, trading volume for SK Hynix-related products accounted for 92% of the total at $161 billion (approximately 213 trillion won).
An industry official stated, "While domestic attention has been focused on the single-stock leverage ETF issue, domestic and international investors are rapidly shifting to perpetual futures." The official added, "Even outside Korea, investors can track SK Hynix and Samsung Electronics with 10x or 20x leverage, raising concerns about investor losses."
In fact, according to the Financial Supervisory Service, the daily average trading volume of single-stock leverage ETFs decreased from 11.7 trillion won before the financial authorities announced supplementary measures on July 30 last month to around 800 billion won after implementation.
Meanwhile, as the perpetual futures market expanded on overseas exchanges that allow 24-hour trading and are not subject to domestic regulations, financial authorities issued an investor warning. This is because losses can accumulate rapidly given the high leverage of these products. For example, the financial authorities explained that for a product linked to the Korean stock index at 150 times, if the index moves just 0.66% in the opposite direction during trading hours, the entire investment amount could be forcibly liquidated.
Nam Gil-nam, Senior Research Fellow at the Capital Markets Institute, stated, "The market for high-leverage perpetual futures related to Korea, such as Samsung Electronics and SK Hynix listed on overseas cryptocurrency exchanges, is growing rapidly, increasing the need for investor protection." He added, "For stock and stock index ETF products that are not cryptocurrencies, financial investment regulations and investor protection rules are necessary."
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