South Korea will tighten the rules for single-stock margin trading starting from August 19th. New investors will be required to complete at least 5 hours of simulated trading.

August 12th. According to Yonhap News Agency, the Financial Services Commission of South Korea approved rule amendments on August 12th to further strengthen the management of ETF and ETN price deviation starting from August 19th. The commission will also expand the paper trading requirement to include single-stock leveraged products listed in South Korea and overseas, including inverse products.

The new rules will tighten the price deviation management standards for all ETFs and ETNs from 3% for domestic products and 6% for overseas products to 2% and 5%, respectively. For liquidity providers who intentionally, significantly, or repeatedly breach their management obligations, the Korea Exchange plans to restrict their additional liquidity provision business.

Starting from August 19th, individual retail investors investing in single-stock leveraged products listed in South Korea or overseas for the first time must first complete free paper trading. Investors must engage in paper trading for a minimum of 5 trading days, with each day lasting at least 1 hour, totaling no less than 5 hours, to experience the negative compounding effect of leveraged products and the actual trading environment.

The Financial Services Commission of South Korea stated that on July 31st, the basic margin requirement for single-stock leveraged products was raised to 30 million KRW in cash, leading to a trading volume reduction to less than one-fifteenth compared to the previous day. The regulatory body mentioned that although the recent stock market volatility has slightly eased, instability factors still exist, and they will continue to monitor the market and promote follow-up measures.