The Exchange Traded Fund (ETF) market celebrates the 10th year since its launching in October 2002 at the Korea Exchange, providing a stable demand base and low-cost dispersed investment means for investors, President and COO Kim Jin-gyu of the KOSPI Market Division at  the Korea Exchange said recently.

The stock exchange said the ETF market has grown tremendously in the past decade in its key areas including the scale, diversity of underlyings, and investor numbers to propel the market to rank the 10th largest in the world.

Total net assets expanded 39 times during the period to 13.4 trillion won this year from 340 billion won in 2002, reaching a fast growth phase following the formation of its market base.

The number of products increased to 131 this year, up from just four in 2002, progressing to be a high-tech market with huge diversity in investment assets, regions, and investment strategy, the stock exchange reported.

The number of investor accounts jumped to 380,000 this year from just 10,000 when it was launched in 2002, with so many investors participating in the ETF market and with the number of employees rising to 250 from only 20, enhancing its competitive edge as an investment market and creating many jobs to help the national economy.

The Korea Exchange, encouraged by its enormous growth, plans to see that its total assets grow to 120 trillion won and the number of investment products expand to around 350 to rank the seventh largest globally by 2020 under the strategy drawn up based on its past performance.

The strategy also is designed to create a new corner for the capital market in a bid to speed up the fusion of the real economy and finance as a window for investors to get an easy access to overseas markets.

The measures to push the strategy include building a base for quality growth, the reform of regulations for initial public offerings through the introduction of such provisions as strengthening the entry and exit, and new commodities listing. The screening of the deliberations on IPOs and their transparency will be based on the guidelines to be established.

Considerations will be given to the introduction of overseas ETFs in the domestic stock market, synthetic ETFs, and active ETFs. Institutional investors will be invited to invest more in ETFs and expand their roles by luring retirement funds and other funds to participate in the ETF market as the sale of ETFs by securities firms will be strengthened and education on institutional investors and public relations on the ETF market will be held often and steadily.

Market management will be developed to be like those in advanced countries to protect the investors with derivative based ETFs that are continuously regulated and ETFs with low transaction rates will be taken care of. ETF products will be classified based on type and will be tightly managed under the new price stabilizing system to be introduced later.

The tasks to be taken care of in the future include the development of new creative products, as the traditional ETF products have no room for further growth for the continued sustainable growth of the market.

It has become necessary to expand the ETF market since it did not have its own sales network for the continued growth of its annual sales. It has become extremely necessary for the stock exchange and asset management firms to jointly conduct education and marketing programs at the same time in the most effective way. When the influence of the ETF market grows, along with its expansion, the equipment for the stabilization of the market to be introduced will be discussed.

Since 2011, ETF transactions increased substantially, with most of them limited to a number of items. Leverage and inverse in absolute terms have not been excessive compared to the global market.