Minimum Deposit for Leveraged ETFs Raised to 30 Million Won; Trading Unit Set to 20 Shares

[Anchor]

The KOSPI, which had recovered to the 7,000-point level yesterday (July 15), plunged 6.4% today, falling back to the 6,800-point range. Influenced by the weakness of semiconductor stocks in the U.S. market overnight, Samsung Electronics and SK Hynix also saw significant declines. The sidecar mechanism, which was triggered only three times last year, has already been activated 37 times this year. Notably, 19 of these instances occurred after the launch of single-stock leveraged ETFs. In response to ongoing criticism that these products are fueling market volatility, the government announced new measures today.

Reporter Baegun has the details.

[Reporter]

The government held a market situation review meeting presided over by Deputy Prime Minister for Economy Koo Yun-cheol and announced supplementary measures for single-stock leveraged products linked to Samsung Electronics and SK Hynix.

This decision follows criticism that trading volume has been concentrated in these products, which reflect twice the price volatility of the underlying stocks, thereby increasing overall market volatility.

First, the government decided to raise the minimum deposit required for leveraged investment from 10 million won to 30 million won.

Furthermore, the policy of recognizing up to 70% of stock holdings as a deposit will be changed to accept only cash.

Previously, even without cash, an investor could trade leveraged ETFs if they held 15 million won worth of stocks, as it was recognized as having a 10.5 million won deposit. Now, investors must have 30 million won in cash.

The trading unit, which currently allows for transactions of one share at a time, will also be expanded to 20 shares.

These measures are all intended to curb demand from small-scale investors seeking short-term profits.

The change in the minimum deposit is scheduled to be implemented next month, while the change in trading units is expected to take effect in November, considering the time required for securities firms to update their systems.

In addition, the mandatory education time for investing in single-stock leveraged products will be increased to three hours, and the new listing of such products will be temporarily suspended.

Financial authorities project that the market capitalization of leveraged ETFs, currently at 12 trillion won, will shrink to the 4 trillion won range.

While experts anticipate that new investment demand will be suppressed, some analyze that the effect on reducing volatility may be limited.

[Interview: Kim Jae-seung / Researcher at Hyundai Motor Securities: In the short term, there will likely be an effect of reducing trading volume. However, since volatility in semiconductor stocks is extreme globally, I think the volatility of the KOSPI may continue for the time being.]

The government stated that it will monitor market trends and consider additional measures if necessary.

(Video reporting: Shin Jin-soo, Video editing: Park Na-young, Design: Kang Yoon-jung)
※ Please note: This article was translated by AI and may contain errors.