Equity derivatives innovation in APAC drives retail growth: FOW Asia 2026
28th September, 2026
As products such as exchange traded funds (ETFs) draw interest from Hong Kong and South Korea retail investors, concerns around investor protection have come to the forefront.
Speaking at the FOW Asia 2026 conference in Hong Kong on Thursday, panellists examined on the growth of equity derivatives products and the impact they’ve had on retail participation.
In the past few years, exchange traded funds (ETFs) and inverse ETFs have grown drastically in the region with $85 billion assets under management for Hong Kong alone.
While there was a 50% institutional and 50% retail ratio in participation, this has changed recently with a shift to a ratio of 70% retail and 30% institutional for inverse ETFs, according to a participant's estimate.
“In Asia, the semiconductor drive, particularly in single stock products, has prompted this growth,” said a panellist.
South Korea has been at the epicentre of the boom and is still in hypergrowth mode. Hong Kong has expanded its single stock framework to include more mega cap companies and overseas equities.
Comparatively, leveraged inverse products are still a defensive index play in other jurisdictions.
The expert expected further growth of single stock ETF products in the region as more creative products enter the market, for instance, derivative overlays in ETFs.
The advent of AI in trading will also drive more retail participation in derivative products such as options, as high level market data gets democratised for investors.
“A derivative gives increased flexibility and actively managed ETFs use derivatives,” said the panellist. “It’s not a choice between an ETF and a derivative because a derivative is an instrument whereas an ETF gives access to an investment strategy.”
From an investor protection perspective, India and South Korea have been making headlines as retail investor have been burned with trading losses.
The Securities and Exchange Board of India has put in a number of measures to curb speculative trading of equity derivatives products while the South Korea regulator has enforced mock trading requirements and cash deposits before investors can participate in single stock inverse ETFs.
The panellists highlighted that investor education is key and that this is a shared responsibility between exchanges, intermediaries and regulators, as well as individual investors.
Comparing APAC regulators to the US, a panellist pointed out that there’s a clear difference in the legal system and cultural approach to investor protection.
“From a legal perspective, class action lawsuits are very common in the US but in APAC, governments often act like a parent and need to be more protective,” he said.
