As the National Assembly's audit begins on October 6, disagreements between the ruling and opposition parties over witness selection for the Political Affairs Committee remain unresolved. The focus is particularly on whether to summon former Presidential Office Policy Chief Kim Yong-beom and Mirae Asset Group Chairman Park Hyun-joo as witnesses regarding the introduction of single-stock leveraged exchange-traded funds (ETFs). The committee adopted 314 institutional witnesses on September 28, but could not reach an agreement on general witnesses.
The ruling People Power Party insists that to understand the process behind the introduction of single-stock leveraged ETFs, it is essential to bring in individuals involved in the policy decisions at that time. Conversely, the Democratic Party opposes the selection of related witnesses. As disputes over witness selection continue even before the audit begins, the actual examination of the financial product's introduction and investor protection issues is being sidelined.
Four months have passed since single-stock leveraged ETFs entered the market. During this time, the domestic stock market has experienced significant fluctuations. Days when the KOSPI index rose or fell by more than 3% increased from 11 trading days in June to 14 in July, coinciding with the full-scale trading of single-stock leveraged ETFs. Days with fluctuations exceeding 5% also rose from 7 trading days in June to 10 in July. The number of times the sidecar mechanism was activated in the securities market increased from 10 times in June to 15 in July, while circuit breakers rose from 3 to 4. The KOSPI 200 Volatility Index (VKOSPI) soared to 96.94 as of the close on June 29.
However, these indicators alone do not definitively prove that single-stock leveraged ETFs have increased market volatility. Various factors, including semiconductor market conditions and external variables, were simultaneously at play during that period. Nonetheless, concerns have been raised that single-stock leveraged products could amplify investment demand for specific large-cap stocks. Therefore, what needs to be clarified during the audit is not just the outcome of increased volatility but how much of this risk was anticipated at the time of introduction.
Moreover, the focus should be on the process of introducing the product rather than the product itself. The plan for introducing single-stock leveraged ETFs was announced in January of this year, followed by regulatory amendments in April, leading to their market launch on May 27. This rapid institutionalization raises questions about whether various opinions were adequately considered during the short time from discussion to launch. It has been reported that during the consultation process with the Korea Financial Investment Association before the product's launch, suggestions were made to diversify the underlying assets beyond Samsung Electronics and SK Hynix to include companies like Hyundai Motor and Samsung Electro-Mechanics to mitigate risks. This was intended to broaden the underlying assets in response to the increasing number of related products overseas.
Considering the audit schedule, it is expected that the selection of witnesses by the Political Affairs Committee will be finalized by October 2. However, the atmosphere already suggests a 'high-stakes political battle.' The ongoing sluggish tug-of-war over witness selection should come to a close, allowing the focus to shift to the next stage. What needs to be examined during this audit is not merely identifying the names of those responsible but understanding the decision-making processes that lie behind those names.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.