Jung Chung-rae, a candidate running in the Democratic Party of Korea leadership election, mentioned a proposal to suspend transactions related to single-stock leveraged exchange-traded funds (ETFs), which have been cited as a cause of the recent KOSPI plunge. Song Young-gil and Kim Min-seok took a cautious stance.
On the 29th, at a televised debate for party leadership candidates held at MBC in Sangam, Mapo-gu, Seoul, Jung said, "I heard that single-stock leveraged ETFs are among the main causes of heightened volatility," adding, "After listening to experts, there is a proposal asking what about suspending transactions of single-stock leveraged ETFs for the time being."
In the livelihood economy segment of the debate, Jung said, "The index that had hit 9,300 is fluctuating to 5,600. How great must the damage, sense of loss, and shock have been in that process," adding, "As one responsible lawmaker of the ruling party, I am sorry."
He went on, "With regard to single-stock leveraged ETFs, trust assets are depleted, and people who trade stocks say they feel 'no one is looking after us,'" adding, "This is not something to leave only to officials at the Financial Services Commission. Politically and in terms of state affairs, we must make decisions where decisions are needed."
Song and Kim were cautious about Jung's proposal. Song said, "First of all, from the 31st, we will raise the basic margin deposit to 30 million won and expand the minimum trading unit to 20 shares, so we need to review this comprehensively," adding, "I think government officials should be careful with their words."
Kim said, "If we premise that we must also look at structural volatility, while it is true that we should take extraordinary measures at this point, whether it is right to move straight to a suspension of transactions requires careful review," adding, "It would be good if authorities make a decision after also reviewing the approach of raising the basic margin deposit to 50 million won and running simulations."