FSC chief says launch of single-stock leveraged ETFs reflected various views

Seoul, October 8 (Yonhap) -- The head of South Korea's financial watchdog stated on Thursday that the decision to introduce single-stock leveraged exchange-traded funds (ETFs) was based on a range of perspectives, refuting claims it followed instructions from the presidential office. Financial Services Commission (FSC) Chairman Lee Eog-weon made these comments during a parliamentary review at the National Assembly in response to a question from a member of the opposition party regarding the rationale behind the launch.

"We have taken into account various opinions," Lee stated during the review. In May, 16 single-stock leveraged ETFs were listed on the primary stock exchange, resulting in significant market instability. Following this, South Korea raised the minimum cash deposit needed to invest in single-stock leveraged ETFs to 30 million won (approximately US$22,400) from 10 million won in late July to reduce volatility.

There had been demands (to introduce single-stock leveraged ETFs) as they are permitted abroad but not in Korea, Lee explained. However, the FSC chief disputed a recent market estimate suggesting that individual investors had incurred losses amounting to roughly 54 trillion won due to single-stock leveraged ETFs, arguing that the figure was inaccurate. Despite the necessity of implementing this policy, Lee expressed regret over the losses, concerns, and harm that the single-stock leveraged ETFs have caused.