Regulatory concerns surrounding single-stock leverage exchange-traded funds (ETFs) for Samsung Electronics and SK Hynix are spreading beyond financial authorities to the political sphere.

In a recent response submitted to the office of Representative Park Sung-hoon of the People Power Party, the Bank of Korea stated, "Given that Samsung Electronics and SK Hynix account for more than half of the stock market's total market capitalization and trading volume, an expansion in single-stock leverage ETF investments could exacerbate market concentration."

In fact, the proportion of trading value for Samsung Electronics and SK Hynix in the KOSPI market surged from 27.9% at the end of last year to 63.5% at the end of June, highlighting a clear trend of capital concentration.

The Bank of Korea analyzed that when funds are concentrated in specific stocks, if trading in leverage ETFs moves in a single direction, the daily rebalancing and arbitrage trading could amplify stock price volatility and increase losses for individual investors.

This marks a stark contrast to the tone during the release of the Financial Stability Report last month, where the bank mentioned positive effects such as the inflow of foreign capital. By placing financial stability risks at the forefront, the bank has significantly raised its level of caution regarding leverage ETFs.

The political sector has also joined the pressure.

Representative Ahn Cheol-soo of the People Power Party stated on his social media today that "the KOSPI is moving like a casino," and argued that "the delisting of single-stock leverage ETFs for Samsung Electronics and SK Hynix should be considered."

Ahn added, "The expected effect of foreign capital inflow has fallen short of expectations, and it is only increasing market volatility," while raising the issue of accountability for the Financial Services Commission Chairman and the Financial Supervisory Service Governor.

Previously, Financial Supervisory Service Governor Lee Chan-jin also expressed regret over the introduction of leverage ETFs, stating, "I personally reflect on whether I should have laid down on the floor to stop it."

Regarding these developments, some in the securities industry criticized the move, saying, "The increase in market volatility was sufficiently anticipated even before the launch." They added, "For the government to approve the launch of these products and then attempt to shift the responsibility for policy failure onto the market through measures like delisting undermines policy consistency."

Reported by Lee Hyeon-yeong | Video by Ahn Jun-hyeok | Graphics by Yang Hye-min | Produced by SBS Digital News