South Korea's President Lee Jae-myung Urges Stricter Rules for Single-Stock Leveraged ETFs

Odaily Planet Daily reported that South Korean President Lee Jae-myung said at a cabinet meeting on Tuesday that single-stock leveraged ETFs have drawn broad criticism for "excessively amplifying market volatility," and urged relevant authorities to strengthen rules "promptly and thoroughly." Lee noted that while regulators have already taken steps, many investors argue these products have intensified volatility and price declines, exposing gaps in policy effectiveness. The debate has been fueled by controversies around single-stock leveraged ETFs linked to Samsung Electronics and SK Hynix. Lee called on financial regulators to move quickly to draw up and refine supporting measures, and to prepare additional steps if needed. Korea's Financial Services Commission said the products were introduced to curb capital outflows tied to overseas equity investing and to bring investor activity under domestic oversight. The commission added that 2x to 3x leveraged products are common in overseas markets and that the policy is meant to keep more capital within Korea. According to the FSC, the overseas leveraged market has been shrinking, and net purchases of overseas stocks by Korean retail investors fell from about $40 billion for all of last year to $2.8 billion in the first half of this year, helping stabilize the exchange rate. Even so, market participants continue to question whether single-stock leveraged ETFs worsened volatility during the latest sharp swings in semiconductor shares. Lee said the government will closely track market impact and roll out further measures if necessary. (NATE)