Volatility of Seoul stock index drops after curbs on leveraged ETFs

Seoul's KOSPI 200 volatility index, a measure of market fear and expected volatility over the next 30 days, has dropped significantly following the introduction of stricter regulations on leveraged ETFs. The Korea Exchange (KRX) announced on Monday that the index had fallen to 69.87, marking an 18.91% decline from its previous value of 86.18 on July 30. This drop makes it the lowest level since May 28, underscoring the ongoing market instability.

The regulation implemented on July 31 increased the minimum cash deposit required for investing in single-stock leveraged ETFs from 10 million won to 30 million won. These ETFs were linked to major companies such as Samsung Electronics Co. and SK hynix Inc. and were introduced in May. They have been widely blamed for causing the recent sharp fluctuations in the domestic stock market.