As single-stock leverage exchange-traded funds (ETFs) have been pointed out as a cause of increased stock market volatility, financial authorities have decided to step in to manage total volume, including setting individual investment limits.

Deputy Prime Minister Koo Yun-cheol, Bank of Korea Governor Hyun Song Shin, Financial Services Commission Chairman Lee Eok-won, and Financial Supervisory Service Governor Lee Chan-jin held an emergency market situation inspection meeting at the Government Complex-Seoul this evening (the 29th) and decided accordingly.

Accordingly, the authorities plan to impose investment restrictions, such as limiting the proportion of single-stock leverage to within 20 percent of an individual's total investment amount in financial investment products.

In addition, to curb excessive trading, they decided to increase the burden of trading costs by applying a heavy order surcharge in the futures market, and to introduce mock trading in addition to preliminary education prior to investing.

These measures will be implemented immediately.

Furthermore, considering cases such as Hong Kong's flexible adjustment of leverage and inverse product multipliers depending on market conditions, the authorities decided to establish a legal basis allowing them to take market stabilization measures in emergency situations.

Previously on the 16th, financial authorities announced supplementary measures for single-stock leverage products, such as raising the basic deposit from 10 million won to 30 million won and suspending new listings.

However, as the South Korean stock market has shown significant volatility compared to other countries, with the KOSPI dropping below the 6,000 level recently, the authorities stated that they will maintain a 24-hour monitoring system with the highest level of vigilance for the time being.

(Photo provided by the Ministry of Economy and Finance, Yonhap News)