South Korea Pledges to Take Further Steps to Curb Leveraged ETF Demand

July 28th – Chairman of the Financial Services Commission of South Korea, Lee Eog-weon, stated that further measures will be considered to curb the recent surge in demand for single-stock leveraged exchange-traded funds (ETFs), which have been identified as a driver of stock market volatility. Lee Eog-weon indicated that he will assess the impact of a new policy that will raise the minimum cash collateral required to invest in a single-stock leveraged ETF to 30 million Korean won (about $20,400), effective this Friday.

The South Korean government has accelerated the implementation of this collateral requirement to stabilize the market and protect investors. Lee Eog-weon stated, "If the demand fails to cool down significantly, we will also review and prepare additional measures in advance." One of the potential measures mentioned is the implementation of aggregate management measures, which would restrict investors from allocating more than 20% of their individual financial investment portfolios to such ETFs.