DP urges tougher monitoring of single-stock leveraged ETFs amid volatility concerns
The ruling party asked financial authorities to watch single-stock leveraged ETFs more closely and consider more steps if volatility and market distortions continue.
Lawmakers part of the National Policy Committee attend a closed-door meeting with the Financial Services Commission and the Financial Supervisory Service at the National Assembly in Yeongdeungpo District, western Seoul, on July 20.
NEWS1
The ruling Democratic Party (DP) urged financial authorities to step up monitoring of the market impact of single-stock leveraged exchange-traded funds (ETFs) on Monday and prepare additional measures if needed.
"We asked the authorities to monitor overall market conditions more closely and assess the situation," Rep. Park Sang-hyuk, the DP's floor secretary on the National Assembly's National Policy Committee, said Monday. The committee's DP lawmakers held a closed-door meeting with officials from the Financial Services Commission (FSC) and the Financial Supervisory Service to discuss financial issues, including single-stock leveraged ETFs.
"We also asked them to consider additional measures if necessary and maintain close communication with the committee when preparing related policies."
No new regulations or legislative amendments were discussed during the meeting, as it was first necessary to assess the effectiveness of measures announced by financial authorities on Thursday, many of which have yet to take effect.
"Some of the measures have not yet been implemented, and others will take effect at different times," Rep. Park said. "No additional measures were discussed separately today."
The FSC announced Thursday that it would raise the minimum deposit required to invest in single-stock leveraged ETFs from 10 million won ($6,760) to 30 million won and increase the minimum trading unit from one share to 20 shares. Authorities will also suspend approvals for new single-stock leveraged ETFs for the time being while strengthening investor education and oversight of product advertising. The measures will take effect in phases beginning early next month.
Single-stock leveraged ETFs recently came under criticism for concentrating investment in certain stocks and triggering large volumes of trading just before the market closes, fueling stock price volatility.
The Tiger Samsung Electronics Single Stock Leverage ETF fell 10.62 percent during intraday trading on Monday to 10,940 won, while the Tiger SK hynix Single Stock Leverage ETF dropped 7.99 percent to 11,280 won.
The DP and the government plan to first evaluate whether the measures taking effect next month reduce stock price volatility. Authorities will also closely monitor the gap between ETF prices and their underlying asset values and how concentrated trading is near the market close.
Officials said additional measures could be considered if market distortions persist after the existing measures are implemented.
BY KWEN YU-JIN [[email protected]]
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
