Core Viewpoint - South Korean financial regulators have notified five local banks of impending fines totaling approximately 2 trillion KRW (around 9.6 billion RMB) for improper sales of "snowball" products, marking a significant regulatory action since the enactment of the Financial Consumer Protection Act in 2021 [1] Group 1: Regulatory Actions - The five banks involved are Standard Chartered Korea, KB Kookmin Bank, Shinhan Bank, Hana Bank, and NongHyup Bank, with final decisions on the fines expected next month [1] - This fine represents the first instance of penalties reaching the trillion KRW scale under the Financial Consumer Protection Act [1] Group 2: Background of the Issue - The controversy stems from the "Korean Snowball Crisis," which involves equity-linked securities (ELS) that function similarly to selling put options on stock indices, offering promised returns unless the index falls below a certain threshold [1][2] - These products gained popularity among retail investors in South Korea, particularly among middle-aged and elderly individuals seeking low-risk investment options [2] Group 3: Financial Impact - As of September last year, accounts linked to H-shares in ELS reported a total principal loss of 10.4 trillion KRW, with losses amounting to 4.6 trillion KRW [3] - The South Korean market has approximately 19.3 trillion KRW in outstanding snowball products, with over 17.7 trillion KRW held by individual investors, including more than 25% owned by individuals aged 65 and older [3] Group 4: Historical Context - Previous incidents have led to regulatory actions, such as in 2019 when financial institutions were ordered to return up to 80% of losses incurred by investors in interest rate derivative products [4] - The structured product market in South Korea, valued at 96 trillion KRW, has faced multiple external shocks, including significant market events in 2015, 2016, and 2020 [5]