KOSPI '150x leverage' products listed on Binance, trading volume reaches $8.3 billion

The world's largest virtual asset exchange, Binance, has listed derivative products that track the performance of the KOSPI index and individual stocks like Samsung Electronics and SK Hynix, with leverage ranging from 20 to 150 times. Since their listing, these high-risk financial instruments have generated substantial trading activity, with approximately 11.87 trillion Korean won (about $8.9 billion) traded in just one week.

These derivative products are designed to mirror the returns of underlying assets, but with amplified gains or losses due to the high leverage. For instance, a 1% rise in the KOSPI index could theoretically result in a 150% profit for investors in the 150x leveraged product. However, the inverse is also true: a small decline in the index could lead to losses that make recovering the principal investment virtually impossible.

Binance initially offered leverage of up to 20x for KOSPI-linked derivatives when trading began on June 22. This was increased to 50x on June 26. Similarly, derivative products tracking Samsung Electronics and SK Hynix were launched with leverage of 20x to 50x. Trading and settlement for these products on Binance are conducted exclusively in Tether (USDT), a stablecoin pegged to the US dollar. The 24-hour trading capability on virtual asset exchanges allows for continuous trading of derivatives based on South Korean stock market indices and individual stock prices.

Data from financial market information website TradingView reveals that KOSPI derivatives traded on Binance generated $773.92 million (approximately 1.03 trillion Korean won) between June 22 and June 27. The combined trading volume for derivative products tracking Samsung Electronics and SK Hynix during the same period reached $6.94 billion (approximately 9.24 trillion Korean won). This brings the total trading volume for these KOSPI and individual stock derivatives to nearly 11.87 trillion Korean won.

Experts are urging caution. Hwang Seok-jin, a professor at Dongguk University's Graduate School of International Information Security, highlighted that these products, particularly those tracking semiconductor stocks like Samsung Electronics and SK Hynix, exemplify a concentration of investment. He strongly advised investors to be particularly mindful of the high liquidation risks associated with derivatives traded on overseas exchanges.

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'Samjeonhanik' etc. is an example of the concentration phenomenon in semiconductor stocks. Investors must pay special attention to the high possibility of liquidation for derivatives on overseas exchanges.