President Lee: "Criticism Exists That Leveraged ETFs Exacerbated Market Instability... Supplementary Measures Needed"

President Lee Jae-myung has ordered the swift preparation of supplementary measures regarding "single-stock leveraged ETFs (Exchange Traded Funds)," which have recently been identified as a cause of capital market volatility, stating, "There is criticism that they have intensified certain sharp declines and acted as a form of adjustment following rapid stock price surges."

President Lee mentioned the single-stock leveraged ETFs, which were introduced by financial authorities to manage foreign currency outflows resulting from overseas stock investments and the subsequent high exchange rate issues, during the 31st Cabinet Meeting he presided over at the Blue House today (July 21).

President Lee pointed out, "It seems true that this has become one of the causes of complaints from domestic investors. Does it not intensify rises during an upward phase and exacerbate declines during a downward phase?" He then asked, "Has it been helpful in stabilizing the foreign exchange market as originally expected?"

Financial Services Commission Chairman Lee Eog-won responded to the effect that if the leveraged ETFs had not existed, more funds might have flowed out to overseas markets.

President Lee assessed, "Because (the single-stock leveraged ETFs) were introduced precisely during a rapid upward phase, at the peak of the adjustment, it appears there is an aspect of optical illusion that makes it seem as if the problems are more serious because of them."

He then instructed, "While it is difficult for policy authorities to be perfect, ensure that necessary response measures are taken swiftly and boldly."

President Lee stated, "Stock market participants believe that they have suffered losses because volatility increased and the scale of the decline widened (due to leveraged ETFs)," adding, "It is our role to create supplementary measures."

He continued by encouraging the attendees, saying, "Policy is always difficult in many respects. It is a challenging situation, but let us deal with it wisely."
※ Please note: This article was translated by AI and may contain errors.