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

[Anchor]

As the KOSPI hits an all-time high, SK Hynix has overtaken Samsung Electronics to become the number one company by market capitalization. Amid this shift, Lee Chan-jin, Governor of the Financial Supervisory Service (FSS), has launched a pointed criticism against single-stock leverage ETFs tracking Samsung Electronics and SK Hynix.

Reporter Lee Tae-kwon has the story.

[Reporter]

FSS Governor Lee Chan-jin has poured out criticism regarding leverage products based on single stocks of Samsung Electronics and SK Hynix.

The market capitalization of these leverage and inverse products, which were launched last month, has surged to over 15 trillion won, with cumulative trading volume reaching 173 trillion won since their debut.

Governor Lee expressed deep concern that this trend could lead to significant losses for individual 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 these are extremely high-risk investments, there is no cooling-down effect taking place.]

In fact, during consecutive market downturns, the maximum drawdown of these products averaged 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) could exceed 10 trillion won. The investors are paying anywhere from 40% to as much as 70% (of the total market cap) in fees.]

He also stated that while these products were introduced to encourage "Seohak Ants" (individual investors who invest 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 having blocked 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 mentioned that he is currently discussing with the Financial Services Commission to explore ways to mitigate these shocks.

Regarding the incident where Mirae Asset Securities was allocated zero shares during the SpaceX listing, he called it an "absurd situation" and emphasized that the FSS is looking into 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)
※ Please note: This article was translated by AI and may contain errors.