Financial Services Commission of Korea: If demand for single-stock leveraged ETFs does not cool down, it will consider setting individual investment limits

On July 29, according to Korean media SUPPLY, the South Korean stock market fell sharply during intraday trading today and triggered the Level 1 circuit breaker mechanism. Lee Eok-won, Chairman of the Financial Services Commission, stated that if the market demand for single-stock leveraged ETFs does not cool down sufficiently, regulators will consider introducing further regulatory measures, including personal investment quota limits. It is understood that South Korea may limit the investment scale of single-stock leveraged ETFs to within 20% of an individual's total financial investment assets and is evaluating further raising the investor entry threshold, including introducing regular re-education, simulated trading, and minimum investment experience requirements. Meanwhile, the Financial Services Commission has requested fund companies to diversify the timing of ETF rebalancing to avoid concentrated position adjustments at the end of the trading day that amplify market volatility, and has called on liquidity providers (LPs) to reasonably control quotes and trading frequency to reduce unnecessary transactions. The Financial Services Commission had previously announced that starting from July 31, the minimum margin for single-stock leveraged ETFs would be increased to 30 million Korean won, and investor education and premium rate management would be strengthened.