Financial authorities are reportedly reviewing a plan to move up to the end of this month the increase in the minimum margin for single-stock leveraged exchange-traded funds (ETFs), which had been set to take effect next month. The move is seen as a follow-up after President Lee Jae-myung called for the swift implementation of supplementary measures for single-stock leveraged ETFs.
According to the financial investment industry on the 23rd, the Korea Financial Investment Association held a working-level meeting on the 21st with IT staff from securities firms and related institutions, including the Korea Exchange (KRX) and Koscom, to discuss the implementation of the single-stock leveraged ETF system. The meeting was reportedly held to review preparations to implement the supplementary measures released by the Financial Services Commission in the IT systems.
Earlier, President Lee Jae-myung said at a Cabinet meeting on the 21st regarding the supplementary measures for single-stock leveraged ETFs, "There are also comments questioning whether that would be enough," and instructed, "Act decisively to take the necessary response measures swiftly."
The financial authorities are said to be reviewing a plan to move up to the end of this month the increase in the minimum margin, which they had initially considered implementing in early next month. However, the authorities will make the final decision on the actual implementation timing and application method.
A financial investment industry official said, "The meeting on the 21st was to discuss working-level preparation matters, such as how to implement the minimum margin system in IT," and added, "The timing and schedule of implementation are matters to be decided by the government and related institutions."
Once the new standards take effect, investors seeking to newly purchase or add to positions in single-stock leveraged ETFs must hold the minimum margin of 30 million won in cash, instead of the current 10 million won. Currently, substitute securities such as stocks and bonds are also recognized as part of the minimum margin, but a plan is being pursued to recognize only cash going forward.
It is also known that, in addition to raising the margin, the financial authorities are reviewing moving up the implementation timing of the plan not to recognize substitute securities as part of the minimum margin.