The government has implemented comprehensive regulations on single-stock leverage products, which have contributed to increased market volatility amid recent investment surges. The launch of new products will be temporarily halted, and the minimum deposit requirement will be raised to 30 million won, alongside a complete ban on advertising.
On July 16, Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol announced these measures during a joint market situation assessment meeting held at the Korea Federation of Banks.
Koo assessed that the recent surge in stock prices has led to profit-taking and rebalancing, influenced by various forecasts regarding the global AI economy and semiconductor industry, as well as the high proportion of semiconductors in the national economy, contributing to ongoing market volatility.
Due to concerns about increased market volatility stemming from the rapid growth in market capitalization and trading volume of single-stock leverage products, the government has decided to implement supplementary measures after consultations with relevant agencies.
To prevent overheating in investment demand, the government will temporarily suspend the launch of new single-stock leverage products until the market stabilizes and will also impose a complete ban on advertising.
The minimum deposit for domestic and foreign single-stock leverage products will be raised from the current 10 million won to 30 million won, with the requirement that it be paid in cash. Additionally, the government will enhance risk guidance and education for investors. The trading unit for single-stock leverage products will also be expanded.
Regulations on liquidity providers (LP) will be tightened to prevent excessive divergence between product prices and actual asset values. The current management obligation standards for LP divergence rates—3% for domestic stock ETFs and ETNs and 6% for foreign stock ETFs and ETNs—will be strengthened, and penalties for securities firms and asset management companies that violate these standards will be increased.
Meeting participants stated they will closely monitor the trends and market impacts of single-stock leverage products and will consider additional market stabilization measures if necessary.
Meanwhile, following the Bank of Korea's recent interest rate hike, movements in the financial market remained relatively limited. However, the government plans to continuously assess market conditions and implement measures to alleviate the burden on vulnerable borrowers, including small and medium-sized enterprises, small business owners, and low-income households, in response to rising interest rates.
On July 16, Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol announced these measures during a joint market situation assessment meeting held at the Korea Federation of Banks.
Koo assessed that the recent surge in stock prices has led to profit-taking and rebalancing, influenced by various forecasts regarding the global AI economy and semiconductor industry, as well as the high proportion of semiconductors in the national economy, contributing to ongoing market volatility.
Due to concerns about increased market volatility stemming from the rapid growth in market capitalization and trading volume of single-stock leverage products, the government has decided to implement supplementary measures after consultations with relevant agencies.
To prevent overheating in investment demand, the government will temporarily suspend the launch of new single-stock leverage products until the market stabilizes and will also impose a complete ban on advertising.
The minimum deposit for domestic and foreign single-stock leverage products will be raised from the current 10 million won to 30 million won, with the requirement that it be paid in cash. Additionally, the government will enhance risk guidance and education for investors. The trading unit for single-stock leverage products will also be expanded.
Regulations on liquidity providers (LP) will be tightened to prevent excessive divergence between product prices and actual asset values. The current management obligation standards for LP divergence rates—3% for domestic stock ETFs and ETNs and 6% for foreign stock ETFs and ETNs—will be strengthened, and penalties for securities firms and asset management companies that violate these standards will be increased.
Meeting participants stated they will closely monitor the trends and market impacts of single-stock leverage products and will consider additional market stabilization measures if necessary.
Meanwhile, following the Bank of Korea's recent interest rate hike, movements in the financial market remained relatively limited. However, the government plans to continuously assess market conditions and implement measures to alleviate the burden on vulnerable borrowers, including small and medium-sized enterprises, small business owners, and low-income households, in response to rising interest rates.
* This article has been translated by AI.
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