Chairperson Lee Eog-weon of the Financial Services Commission (FSC) said on the 28th that regulations will be eased to allow the launch at home of leveraged exchange-traded funds (ETFs) that track twice the return of a single high-quality stock. However, ETFs that track three times the return of a single stock were excluded, to protect investors.
Lee said this at a monthly roundtable with the press corps held at Government Complex Seoul on the morning of the same day. Accordingly, leveraged ETFs using single blue-chip stocks as underlying assets are expected to be listed on the domestic stock market soon.
Lee said, "Overseas, such products are launched, but at home they are not because of asymmetric regulations, leaving various ETF investment demands unmet," and added, "We will swiftly improve regulations to enhance the attractiveness of Korea's capital market."
The leverage was set at "plus/minus 2x" in line with the global trend. As a result, a Samsung Electronics 2x leveraged ETF or an SK hynix 2x inverse ETF is expected to become possible.
However, to protect investors, ETFs with 3x leverage will not be allowed. Lee said, "Even in the United States, new products launched since 2020 are not permitted to go up to 3x, and existing 3x ETF products were created before 2020," adding, "We also have to consider investor protection, so 3x will not be allowed."
In addition, to enable the launch in Korea of popular overseas dividend products, the government will extend option maturities to lay the groundwork for a variety of covered call ETFs, and it will also push a bill to introduce active ETFs without index requirements.