Koo Yun-cheol, Deputy Prime Minister and Minister of the Ministry of Economy and Finance, addressed criticism that single-stock leveraged exchange-traded funds (ETFs) have been increasing stock market volatility, saying, "We are well aware of the concerns," and, "We are discussing supplementary measures."
Deputy Prime Minister Koo said at the National Assembly's Strategy and Finance Committee plenary session on the 7th, "When we introduced the policy, we looked at both the foreign exchange market and the capital market (the impact), but some issues are being raised now," adding, "We are discussing how to supplement and minimize such issues."
To the question, "Wasn't it the Ministry of Economy and Finance that pushed for introducing leveraged ETF products as part of exchange-rate management?" Koo said, "Not necessarily," adding, "We introduced them based on the judgment that such products are needed when considering multiple markets comprehensively." Earlier, single-stock leveraged ETFs were also introduced in part to guide the so-called "Seohak retail investors'" demand for overseas stock investments into the domestic market as the strong dollar persisted late last year.
Koo explained, "Before this system was introduced, 2x and 3x leveraged ETFs were being operated overseas, and a lot of investment flowed there," adding, "There was also an aspect of introducing (the products) to prevent that."
Koo added, "We required education (for leveraged ETF investments) and set certain guidelines, but given the many concerns being raised at this point, we are discussing what measures can stabilize the situation."