Financial Supervisory Service Issues First 'Risk Level' Consumer Alert on Crude Oil Futures ETNs

[Image source=Yonhap News]

[Asia Economy Reporter Park Jihwan] The Financial Supervisory Service (FSS) announced on the 9th that it has issued a consumer alert for 'Leveraged WTI Crude Oil Futures ETN (Exchange-Traded Note),' which generates profits when oil prices rise.

This alert is the first case since the FSS introduced the consumer alert system in June 2012 to issue the highest level 'Risk' alert.

The FSS stated, "Despite the surge in the premium between the indicative value and market price of the Leveraged WTI Crude Oil Futures ETN, a large number of investors expecting an oil price rebound have flocked in, leading to anticipated damages, prompting the issuance of the consumer alert."

Although the Korea Exchange and issuers are warning about the loss risks due to the large premium, trading volume and the premium have surged, expanding the risk. The FSS explained that investing under such circumstances could result in significant losses, hence the issuance of the highest level consumer alert.

The FSS's consumer alert system operates in three stages?Caution, Warning, and Risk?to prevent financial consumer damages in advance and to stop their spread.