South Korea’s financial regulator will increase oversight on a foreign exchange derivative.

The Financial Supervisory Service(FSS) began a probe on multiple South Korean retail banks following reports from the country’s central bank that they may have oversold target redemption forwards(TRF) to exporting firms. 

FSS officials are undertaking onsite investigations with Bank of Korea officials. FSS authorities will also carry out additional probes on the products.

TRFs serve as hedging products aimed at providing investors with above-market forward rates. Firms aim to decrease uncertainties rising from exchange rate volatility.