South Korea's single-stock leveraged ETF daily trading volume plummets 27% as funds cool down ahead of new 30 million won margin rule.

As South Korea tightens financial regulations, trading in single-stock leveraged ETFs is rapidly cooling down. Data from the Korea Exchange shows that on July 27, the total trading volume of 14 leveraged ETFs and 2 inverse ETFs based on Samsung Electronics and SK Hynix fell to 7.46 trillion Korean won, a decrease of 27% from the previous trading day and more than 30% from the daily average of the previous week. This accounted for 36.9% of the total ETF market trading volume. Among them, SK Hynix-related products accounted for 5.23 trillion Korean won, or about 70% of the total trading volume of single-stock leveraged and inverse ETFs. The market believes that the cooling of trading is mainly due to the expectation of new regulations from South Korea's financial regulators. Starting July 31, individual investors will need to hold a cash collateral of 30 million Korean won to newly purchase or increase their holdings in single-stock leveraged ETFs/ETNs. Regulators also plan to increase the minimum trading unit to curb high-frequency short-term trading and reduce market speculative risks.