Single-stock leveraged exchange-traded funds (ETFs) could launch as early as May. ETFs that track double the share price gains of Samsung Electronics and SK hynix are expected to debut first.

The closing prices are displayed on the dealing room ticker at Hana Bank's headquarters in Jung-gu, Seoul, on the afternoon of the 20th. The KOSPI closes at 5,781.20, up 17.98 points (0.31%) from the previous day. In the Seoul foreign exchange market, the dollar-won rate records 1,499.40 won, down 1.60 won from the 3:30 p.m. weekly close the previous day. /Courtesy of News1

On the 22nd, according to the financial investment industry and financial authorities, ETFs that track the return of a single stock at ±2 times are expected to launch as early as May.

In this regard, the financial authorities plan to release detailed enforcement rules for financial investment business regulations within this month. The rules are expected to specify criteria related to the market capitalization and trading volume of the underlying assets, as well as futures requirements to ensure smooth termination (risk dispersion).

Samsung Electronics and SK hynix are expected to be the first target stocks to launch. The financial authorities are said to be seriously considering first releasing single-stock leveraged ETFs with Samsung Electronics and SK hynix as the underlying assets.

Given the recent increase in stock market volatility, authorities appear to have judged that allowing single-stock leveraged ETFs across a wide range of names would pose significant risks, including investor harm.

More aggressive ETFs are also on the way. These include fully active ETFs and ETFs linked to the KOSDAQ Premium Index.

A fully active ETF is not subject to the index-linking constraint that requires a minimum correlation coefficient of 0.7 with the benchmark index. This allows fund managers broad discretion in portfolio management. It is closer to a listed form of a traditional public offering fund.

An ETF linked to the KOSDAQ Premium Index is tied to the government's restructuring of the KOSDAQ market. Recently, the government has been pursuing a plan to introduce a promotion and relegation system in the KOSDAQ market and reorganize it into two leagues: Premium and Standard. Among them, only the top-tier blue-chip companies in the Premium league would be selected to form a separate index, and an ETF tracking that index would be launched.

The financial authorities aim to propose amendments to the Financial Investment Services and Capital Markets Act for fully active ETFs in the first half, and to launch products linked to the KOSDAQ Premium Index early next year.

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