After the minimum deposit for single-stock leveraged exchange-traded funds (ETFs) rose to 30 million won, trading in products tied to Samsung Electronics and SK hynix has been falling quickly. On the first day the rules took effect, the transaction value dropped to a quarter of the previous day's level, and on the next trading day, volume fell by more than half.
According to the Korea Exchange (KRX) on the 3rd, the trading volume of 14 single-stock leveraged ETFs with Samsung Electronics and SK hynix as underlying assets totaled 112,418,178 shares that day. Compared with 241,927,900 shares on the previous trading day on the 31st of last month, it was down 53.5%.
Trading volume in major products also fell across the board. The volume of "KODEX SK hynix Single-Stock Leverage" decreased 62.0% from 116,923,503 shares on the 31st of last month to 44,387,596 shares that day.
"KODEX Samsung Electronics Single-Stock Leverage" fell from 43,311,691 shares to 21,305,981 shares, down 50.8%. "TIGER SK hynix Single-Stock Leverage" decreased 32.6% from 53,364,914 shares to 35,988,627 shares, and "TIGER Samsung Electronics Single-Stock Leverage" declined 57.1% from 20,607,747 shares to 8,841,049 shares.
The decline in trading of single-stock leveraged products is seen as the result of the higher minimum deposit and stricter cash deposit requirements. Financial authorities raised the minimum deposit for Samsung Electronics and SK hynix single-stock leveraged ETFs to 30 million won from 10 million won starting on the 31st of last month.
Only cash is recognized as a deposit, excluding stocks, ETFs, and bonds. If an investor deposits 30 million won in cash and buys a single-stock leveraged ETF with 20 million won of that, the investor must deposit another 20 million won in cash to make an additional purchase. There are no restrictions on selling existing holdings.
A decline in trading also appeared on the first day of implementation on the 31st of last month. At that time, the transaction value of single-stock leveraged ETFs with Samsung Electronics and SK hynix as underlying assets fell to a quarter of the previous day's level.