The government will discuss on the afternoon of the 16th complementary measures for single-stock leveraged exchange-traded funds (ETFs) on Samsung Electronics and SK hynix.
The Ministry of Economy and Finance said it would hold a market situation review meeting that afternoon. The meeting will be presided over by Deputy Prime Minister and Minister Koo Yun-cheol and attended by Bank of Korea Governor Shin Hyun-song, Financial Services Commission (FSC) Chairman Lee Eog-weon, and Financial Supervisory Service Governor Lee Chan-jin, among others.
This policy meeting is being pursued in response to criticism that single-stock leveraged ETFs have recently heightened volatility in the Korean stock market. President Lee Jae-myung the previous day, during a briefing at the Blue House, told Korea Exchange (KRX) Chairman Jeong Eun-bo to "quickly prepare complementary measures (for leveraged ETFs)." To Financial Supervisory Service (FSS) Governor Lee Chan-jin, Lee noted, "It seems you have been taking a lot of heat recently (over the single-stock leveraged ETF matter)." Lee, at a press roundtable last month, said, "I regret whether we should have blocked it even if we had to lie down before accepting the securities registration statement."
Blue House policy chief Kim Yong-beom also said, "It was introduced on May 27 and about a month and a half has passed, and since it is a newly introduced system in the operation process, we plan to closely examine its market impact at the F4 meeting (market situation review meeting)," adding, "If any complementary steps are needed, we will check, discuss, and decide at the meeting."
Single-stock leveraged ETFs are high-risk products designed to track twice the daily price change of Samsung Electronics and SK hynix. When share prices rise, returns can be amplified, but when they fall, losses grow accordingly, giving them a de facto legal speculative nature. By their nature, trading is concentrated in certain large-cap stocks, increasing volatility in spot prices and the overall index.