The number of underlying stocks will be increased from currently 7 to 30.
The current 7 underlying stocks are mostly large-caps held by foreigners and institutions, and they are not sufficient to meet various demands of investors.
(Criteria for Selecting Underlying Stocks)
- Base Date of Selection: May 2, 2005
- Out of the stocks currently listed on the Stock Market of KRX (except administrative issues) with at least 10,000,000 outstanding stocks, 10,000 minority shareholders and 500 billion won in annual trading value, the new underlying stocks to be added will be determined, based on the criteria including market capitalization and financial conditions according to Article 203 of the Futures and Options Business Regulations.
- Average share price of the recent 3 months immediately prior to the date of selection should be 10,000 won or higher.
- There should be no case of capital impairment by more than 50% during the recent 5 business years immediately prior to the date of selection.
- All of the independent auditor’s opinions in the annual reports of the recent 5 business years immediately prior to the date of selection should state that the financial statements during the corresponding years “present fairly, in all material respects, the financial position.”
- The company should not have a record of having undergone corporate dissolution, court mediation, or corporate workout (companies under a workout program: which are managed by their creditor banks or other creditor financial institutions) during the recent 5 business years immediately prior to the date of selection.
(Expected Effects)
- The planned increase in the underlying stocks is expected to provide a boost for the stock options market.
- More investment options for investors
- More accurate hedging tools for investors investing in individual stocks ? to positively impact the stock market
- Hedging tools for ELS and ELW investors ? to lead to increased issuance of ELS and ELW and to enhance product development