"Should Have Blocked It Even by Lying Down": Financial Supervisory Service Chief Criticizes Single-Stock Leverage Products

[Anchor]

Lee Chan-jin, Governor of the Financial Supervisory Service (FSS), has issued a sharp criticism of single-stock leverage products that track twice the daily fluctuations of companies like Samsung Electronics and SK Hynix. He stated that he should have blocked their introduction, even if it meant "lying down to stop it." He emphasized that these products increase stock market volatility and encourage day trading, ultimately benefiting only securities firms.

Reporter Lee Tae-kwon has the story.

[Reporter]

FSS Governor Lee Chan-jin poured out criticism regarding single-stock leverage products tied to Samsung Electronics and SK Hynix.

Since their launch last month, the market capitalization of these leverage and inverse products has exceeded 15 trillion won, with cumulative trading volume surging to 173 trillion won.

Governor Lee expressed deep concern that these products are highly likely to lead to losses for retail investors.

[Lee Chan-jin/Governor of the Financial Supervisory Service: Most of these are held by individual investors. It seems to be around 92%. Even though it is a very high-risk investment, there is no cooling-off effect taking place....]

In fact, during consecutive market downturns, the maximum drawdown of these products reached an average of 36.9%.

He particularly criticized the situation, noting that the average daily turnover rate soared up to 200%, resulting in a scenario where only securities firms are profiting from trading commissions.

[Lee Chan-jin/Governor of the Financial Supervisory Service: It is estimated that (trading commissions) will exceed 10 trillion won. Investors are paying as little as 40% and as much as 70% (of the total market cap) in commissions.]

He also mentioned that while these products were introduced to encourage "Seohak Ants" (individual investors investing in overseas stocks) to bring their capital back to the domestic market due to the high exchange rate, the effect has been minimal. He went as far as to say he regrets not blocking their introduction, even if it meant "lying down to stop it."

He added that the side effects are too significant, as rapid stock price fluctuations could lead to major shocks for households, and that the government is deeply concerned about the situation.

Governor Lee stated that he is considering ways to mitigate the impact in consultation with the Financial Services Commission.

Regarding the fact that Mirae Asset Securities received zero shares during the SpaceX listing, he called it an "absurd situation" and emphasized that the authorities are investigating whether the risk disclosures related to overseas investments were appropriate.

Reported by Shin Jin-soo and Kim Hak-mo | Video by Choi Hye-ran | Graphics by Jang Chae-woo | Produced by SBS Digital News
※ Please note: This article was translated by AI and may contain errors.