Details
South Korea's Financial Services Commission (FSC) is tightening rules on single-stock leveraged ETFs and ETNs, raising the cash deposit requirement for individual investors from 10 million won to 30 million won, effective July 31. The measure applies to both domestic and overseas-listed single-stock leveraged products. The FSC cited rapid growth in market capitalization and trading volume since the products launched on May 27, as well as increased volatility in major memory chip stocks, as reasons for the accelerated implementation of investor protection measures. Data shows total market cap of the 16 single-stock leveraged products rose from 4.4 trillion won on May 27 to 11.9 trillion won by July 15, while trading volume increased from 10.4 trillion won to 13 trillion won over the same period. Under the new rules, only cash assets will count toward the deposit requirement, excluding securities such as stocks and bonds that were previously accepted. Additionally, proceeds from securities sales must be settled on a T+2 basis before they can be used as deposit, and loans secured by such proceeds are not eligible. The FSC aims to curb high-frequency circular trading where investors sell and immediately repurchase leveraged products on the same day. Existing investors adding to positions must also meet the 30 million won cash deposit requirement, but selling is not restricted. The FSC had already suspended new listings of single-stock leveraged ETFs/ETNs and restricted related advertising from July 16. Further measures are planned, including stronger premium rate management, shorter designation procedures for investment warnings, and adjustments to trading units. The FSC will continue monitoring the market and may introduce additional steps if overheating persists.
0
0
0
0