[Anchor]

The KOSPI has plunged by 6.4%, falling back below the 7,000 mark. As criticism mounts that single-stock leverage ETFs, launched this past May, are exacerbating market volatility, the government has unveiled new measures.

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.

This follows criticism that these products, which reflect twice the price volatility of the underlying stocks, have been attracting significant trading volume and increasing overall market volatility.

First, the basic deposit required for leverage investment will be raised from 10 million won to 30 million won.

Furthermore, the policy of recognizing up to 70% of stock holdings as a deposit will be abolished, with only cash now being 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, investors must hold 30 million won in cash.

The trading unit, which currently allows for transactions of 1 share, will also be expanded to 20 shares.

These measures are all intended to curb demand from those seeking short-term profits through small-scale investments.

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

Additionally, the mandatory education hours 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 project 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 analyze that the effectiveness in 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, given that volatility in semiconductor stocks is extreme globally, the volatility of the KOSPI may continue for the time being.]

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

(Photo: Yonhap News)

Reported by Shin Jin-soo | Video by Park Na-young | Graphics by Kang Yoon-jung
Produced by SBS Digital News