"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 has poured out criticism regarding single-stock leverage products linked 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 could lead to significant losses for retail investors.

[Lee Chan-jin / Governor of the Financial Supervisory Service: Most of these are held by retail investors. It seems to be around 92 percent. Even though these are highly risky investments, there is no cooling-down effect taking place.]

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

He particularly criticized the situation, noting that the average daily turnover rate has soared to as high as 200 percent, 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. Those investors are paying anywhere from 40 percent to as much as 70 percent (of the total market cap) in fees.]

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 having blocked their introduction, even if it meant physically obstructing the process.

He added that the side effects are too great, as rapid stock price fluctuations can lead to significant shocks to household finances, and that the government is deeply concerned about the situation.

Governor Lee stated that he is currently discussing with the Financial Services Commission to consider ways to mitigate the impact.

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 authorities are investigating whether the risk disclosures related to overseas investments were appropriate.

(Video reporting: Shin Jin-soo, Kim Hak-mo | Video editing: Choi Hye-ran | Design: Jang Chae-woo)
※ Please note: This article was translated by AI and may contain errors.