Minimum Deposit for Leverage ETFs Raised to 30 Million Won; Trading Unit Increased to 20 Shares

[Anchor]

The government has introduced supplementary measures regarding leverage ETFs linked to Samsung Electronics and SK Hynix, which have been increasing volatility in the stock market. The move aims to make it more difficult to invest in these products, though it remains to be seen how effective these measures will be.

Reporter Baegun has the story.

[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 leverage products linked to Samsung Electronics and SK Hynix.

The decision follows criticism that the concentration of trading volume in these products, which reflect twice the price volatility of the underlying stocks, has increased overall market volatility.

First, the government has decided to raise the basic deposit required for leverage investments from 10 million won to 30 million won.

Furthermore, the policy of recognizing up to 70 percent of stock holdings as a deposit will be abolished, and only cash will be accepted.

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

The minimum trading unit, which currently allows for trading in single shares, will also be increased to 20 shares.

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

The change in the basic deposit requirement is scheduled to be implemented next month, while the change in trading units is expected to take effect in November, taking into account the time required for securities firms to update their computer systems.

Additionally, the mandatory education time required to invest in single-stock leverage products will be increased to 3 hours, and the new listing of such products will be temporarily suspended.

Financial authorities have projected that the market capitalization of leverage 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 also suggest 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 volatility in the KOSPI may continue for the time being.]

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

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