Chairperson Lee Eog-weon of the Financial Services Commission (FSC) said he would consider, if necessary, a plan to restrict single-stock leveraged products—identified as one cause of volatility in the domestic stock market—to professional investors.
On the 29th, Lee appeared at a National Policy Committee briefing at the National Assembly in Yeouido, Seoul, and, in response to Democratic Party of Korea lawmaker Kim Hyeon-jeong's point that "it is necessary to limit investor eligibility for single-stock leverage-related products to professional investors," he said, "If necessary, there is a plan to set (investment requirements) to professional investors."
A professional investor is one whose month-end average balance of financial investment products has been at least 50 million won for at least one year in the past five years and who meets requirements related to income, expertise, or asset. As single-stock leveraged products are high-risk, this is interpreted as suggesting that a plan to restrict access by retail investors could be reviewed.
He also said he would review a plan to lower the leverage multiple of single-stock leveraged products if a bill is prepared in the National Assembly. Lee said, "Since (the tracking multiple) of 2 times is too large, lowering it could be effective in terms of easing volatility," adding, "We will also look at how to consider investors, such as a beneficiaries' general meeting, in the bill review process." Kim said she is preparing a bill to amend the Financial Investment Services and Capital Markets Act.
Meanwhile, Lee expressed a position that he feels a strong sense of responsibility for the market's volatility. Lee said, "As volatility in the market has increased recently, I am taking very seriously, as a regulator, that investors' expectations for our capital market are being shaken," adding the above.
However, he noted that market volatility is not limited to the launch of single-stock leveraged products. Lee explained, "It is not just one factor (single-stock leveraged ETFs), but multiple factors acting in combination," adding, "Uncertainty in the global semiconductor cycle has continued to grow significantly; expectations and concerns are crossing over whether investment in artificial intelligence (AI) is sustainable and to what extent China's catch-up is becoming visible, and movement in the global semiconductor cycle is fluctuating greatly."