South Korea's exchange traded notes market grew sharply in size in 2016, but it still leaves much to be desired "in quality," the nation's stock market operator said Friday.

The market size has grown to 3.4 trillion won ($2.8 billion) from 1.9 trillion won in 2015 in terms of total asset issuance, as the number of listed products jumped to 132 from 78, according to the Korea Exchange. 

The daily average turnover rose 85 percent on-year to 32.3 billion won last year, with the number of accounts jumping to 21,277 last year from 4,634 in 2015.

In particular, the lineup of products related to foreign markets has expanded to the level of enabling an effective global portfolio amid strong demand for risk-hedging investments, it added.

But the volume of ETN assets actually owned by investors stood at 3.01 percent of the total in 2016, a slight rise from 1.26 percent a year earlier.

ETNs are a type of unsecured debt security tracking the performance of various market benchmarks. Similar to bonds and exchange traded funds, ETNs are traded on the main exchange during normal trading hours.

The KRX said it is planning to stage an active marketing campaign for ETNs in partnership with brokerage firms, with the value of all assets expected to reach 5 trillion won this year. (Yonhap)