South Korea's financial regulator said the launch of single-stock leveraged exchange-traded funds (ETFs) was based on diverse opinions, denying claims it was directed by the presidential office. The Financial Services Commission (FSC) introduced measures to curb volatility after the ETFs' launch in May.
The launch and subsequent volatility of single-stock leveraged ETFs in South Korea have raised concerns about investor protection and market stability, prompting regulatory action and scrutiny from lawmakers.
The chief of South Korea's financial regulator said on Thursday that the decision to launch single-stock leveraged exchange-traded funds (ETFs) was made after considering various viewpoints, pushing back against claims that the presidential office had directed the move. Lee Eog-weon, chairman of the Financial Services Commission (FSC), made these remarks during a parliamentary audit at the National Assembly.
Lee stated that there had been calls to introduce single-stock leveraged ETFs, as they are permitted in other countries. The FSC implemented measures in late July to control market volatility, including raising the minimum cash deposit required for investing in these products to 30 million won (US$22,400) from the previous 10 million won. This followed the listing of 16 single-stock leveraged ETFs on the main bourse in May, which reportedly led to significant market fluctuations.
Lee also disputed a market estimate suggesting individual investors lost approximately 54 trillion won from these ETFs, calling the figure inaccurate. He expressed regret for the losses, concerns, and harm caused by the policy, regardless of its necessity.
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