Four Chances to Prepare for 'Negative Compounding' Ignored... Details of 'Leverage' Meetings Kept Under Wraps

It has been confirmed that at least four meetings among related institutions were held under the leadership of the Financial Services Commission before and after the introduction of single-stock leverage ETFs.

Although the National Assembly requested the submission of relevant materials, both the Financial Services Commission and the Financial Supervisory Service have refused to disclose the attendees and key discussions, citing the meetings were held behind closed doors.

According to data received from the Financial Services Commission and the Financial Supervisory Service by the office of People Power Party lawmaker Song Eon-seok, discussions regarding single-stock leverage ETFs reportedly began at a meeting presided over by the presidential office on January 13.

Subsequently, the Financial Services Commission held a meeting on February 2 to discuss "measures to protect investors in single-stock leverage investments."

Even after the product was launched on May 27, related meetings continued consecutively.

Discussions covered "an initial review after the launch" on June 5, "complementary measures" on July 28, and "additional complementary directions" on August 25.

There were at least four meetings presided over by the Financial Services Commission alone.

Lawmaker Song's office requested the Financial Services Commission to provide the attendees and specific details of the discussions for these meetings.

The Financial Services Commission responded that the meetings were "practical, unofficial gatherings" designed to listen to various opinions from the industry and the field, making it difficult to disclose attendees and main contents since they were conducted privately.

The Financial Supervisory Service, which also attended the meetings, stated that it "does not possess separate meeting minutes."

Single-stock leverage ETFs are products that track up to twice the daily returns of individual stocks, such as Samsung Electronics or SK Hynix.

They are structured so that losses are also magnified when stock prices fall.

Even before the product's launch, the Financial Services Commission warned of investment risks, noting that losses could occur due to the negative compounding effect even if stock prices move sideways.

As volatility issues were raised after the launch, financial authorities additionally introduced investor protection measures, such as raising the basic deposit requirement.

Controversy also persists over the scale of losses incurred by retail investors.

While some sectors in the industry estimate that total losses could reach 3 trillion to 4 trillion won, no confirmed figures are available at this time because individual profit and loss data across all securities firms have not been disclosed.

The People Power Party stated its stance to verify what risks were reported during the process of introducing the product, as well as what issues were checked and decisions made during the meetings held after the launch, during next month's parliamentary audit.

Reported by Kim Minjeong | Video by Lee You-jin | Graphics by Lee Jung-joo | Produced by SBS Digital News
※ Please note: This article was translated by AI and may contain errors.