As early as next month, single-stock leverage and inverse double ETFs on Samsung Electronics and SK hynix are expected to be listed, but the investment path for employees of financial investment firms is likely to be blocked.
The Korea Financial Investment Association on the 21st signaled a revision to the standard internal control rules, deciding to group single-stock ETFs at the same level as individual stocks and apply employee trading restrictions.
Single-stock ETFs scheduled to list on the 22nd of next month will use blue-chip Korean stocks such as Samsung Electronics and SK hynix as their underlying assets. Because only two stocks in effect meet the blue-chip criteria under current financial authority standards, a slew of products are expected to appear that track their returns at 2 times leverage or deliver 2 times gains when prices fall.
The association explained that, for ETFs with a single stock as the underlying asset, the structure is directly linked to the price of a specific stock and therefore has characteristics similar to individual equity securities, making it necessary to apply the same level of internal control standards when employees of financial investment companies trade these ETFs.
Although the association's standard internal control rules are only nonbinding guidelines, acceptance in the field is expected to be very high given the coordination with the authorities.
An association official said, "For employees in the financial investment industry, under the law there have been certain restrictions on proprietary trading in listed equity securities," adding, "Single-stock ETFs are not subject to statutory regulation, but because they have characteristics similar to individual equity securities, we proactively drafted a revision to the standard internal control rules to help prevent financial accidents."