Rule Requiring 30 Million Won Deposit for Single-Stock Leverage to Take Effect on July 31

Responding to criticisms that the implementation date for single-stock leverage countermeasures was too late, the government has decided to move up the enhanced basic deposit requirement to the 31st of this month, three days earlier than originally planned for next month.

The Financial Services Commission (FSC) announced today (the 24th) that it will bring forward the basic deposit reinforcement measure, initially scheduled for implementation in August, to the 31st of this month to rapidly stabilize market demand.

On the 16th, the FSC announced complementary measures raising the basic deposit requirement from the previous 10 million won to 30 million won in cash only, while excluding substitute securities—such as stocks, exchange-traded funds (ETFs), and bonds, which were previously recognized up to 70% of their market value when calculating deposits.

Initially, considering the system development schedules of the industry, the increase in the deposit amount was scheduled to take effect around the 5th of next month, and the ban on recognizing substitute securities around the 19th of next month. However, the implementation dates were moved up through cooperation on electronic system development with related organizations and the financial investment sector.

During a Cabinet meeting on the 21st, President Lee Jae-myung ordered swift and bold responsive measures regarding the single-stock leverage supplementary plans.

Securities firms that fail to complete electronic system development within the deadline will be advised to restrict new trading services related to single-stock leverage products.

Consequently, starting from the 31st, investors must hold more than 30 million won in cash to newly invest in or make additional purchases of single-stock leverage products.

Restrictions will also be put in place to prevent the basic deposit requirement from being relaxed even after a certain period following a transaction.

Currently, securities firms can typically adjust basic deposit requirements after three months of trading, taking into account the investor's trading experience.

Detailed methods related to the recognition of cash basic deposits will also be further improved.

Even if substitute securities are sold, they will not be recognized as basic deposits until the cash is actually deposited.

This measure is designed to prevent excessive day trading, such as selling securities on the same day and immediately repurchasing them.

Currently, substitute securities are recognized as basic deposits immediately upon sale, allowing investors to purchase single-stock leverage products before settlement is completed and cash is deposited.

Limited to single-stock leverage products, the rules are being improved so that they are recognized as cash deposits only on the day the cash from selling securities is actually deposited.

Funds borrowed using sales proceeds as collateral will also be excluded from basic deposits.

Measures to strengthen tracking error management are scheduled to take effect on the 19th of next month, following the procedures for revising exchange regulations and detailed enforcement rules.

The FSC stated that it plans to discuss ways to expedite the implementation of expanding the trading unit of single-stock products to 20 shares, moving it up from the original schedule within November.

The FSC explained that relevant institutions will continuously monitor market conditions, including the impact of these supplementary measures, and review additional complementary steps through in-depth discussions with experts and investors if the market does not stabilize.
※ Please note: This article was translated by AI and may contain errors.