Tong Yang Securities has returned to the local structured products market after the interruption of its issuance since October last year amid financial troubles concerning the Tong Yang Group.
The firm has launched four equity linked securities (ELS) in the retail space since June 23, although three of the four tranches were withdrawn before their respective strike dates. However, SRP has learned that Tong Yang has successfully launched four ELSs and one derivatives linked bond (DLB) in the private banking space with total sales of KRW5bn ($5m).
MinJong Yoo, deputy general manager at Tong Yang Securities, told SRP that the priority for Tong Yang at this stage is to secure the clientele as the firm has been out of the market for almost nine months.
“We will focus on enlarging the capital base by issuing simple structures involving little risk, such as knock out payoffs with step-down barrier levels, to rebuild customer trust that has been tarnished by the corporate incident,” said MinJong Yoo.
Regulatory approval
Although the South Korean Financial Services Commission (FSC) has already approved Yuanta Financial Holdings (Yuanta) to become the main shareholder of Tong Yang Securities, and market rumours suggest that the firm may decide to operate under the name of Yuanta due to serious damages caused to the Tong Yang brand, the securities firm has nonetheless issued structured products under its own name to the surprise of market watchers.
“The firm has not yet decided whether to run under Yuanta’s brand – it will be finalised after the shareholders meeting,” said a spokesperson at Tong Yang Securities. “There will not be any further restructuring within the firm.”
The local media reported recently that 650 employees of Tong Yang Securities have already left the firm, which accounts for 25% of the total workforce.
Tong Yang Securities was one of the strongest players in the retail space up to 2013 and has always ranked highly in the top five issuers table, competing closely with Korea Investment & Securities, Daewoo Securities, Woori Investment & Securities and Mirae Asset Securities.
However, the firm caused outrage among investors when commercial paper and corporate bonds linked to Tong Yang Group and its subsidiaries were sold through Tong Yang Securities, mainly to individuals who were older and had little knowledge of investment risks.
Yuanta Financial Holdings is a financial services firm based in Taiwan actively distributing structured products through its subsidiaries Yuanta Securities and Yuanta Bank.
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