The controversy surrounding single-stock leveraged exchange-traded funds (ETFs) is expected to be a major issue in this year's National Assembly audit. As discussions expand to include the product's introduction process, policy decision background, individual investor losses, and market volatility, tension is rising within the financial investment sector.
According to the financial investment industry on September 7, the People Power Party submitted a request for a national investigation on September 4, demanding clarity on the policy decision process and accountability regarding the introduction of single-stock leveraged ETFs. The party plans to examine the correlation between the timing of the product's introduction and the upcoming local elections, as well as whether political objectives took precedence over investor protection procedures in capital market stimulation. The investigation will encompass the entire communication, reporting, and directive system among the Presidential Office, Financial Services Commission, Financial Supervisory Service, Korea Exchange, and asset management industry.
Particularly, debates are anticipated regarding the speed of the system's introduction and the selection of target stocks. Industry insiders have pointed out that the system, initially expected to be introduced in the second half of this year, was implemented just months after discussions between the government and industry intensified, suggesting it was rushed without adequate review and discussion.
As the National Assembly audit is set to take place over three weeks starting October 6, there is keen interest in who will be selected as witnesses. Financial Services Commission Chairman Lee Ok-won and Financial Supervisory Service Chairman Lee Chan-jin are expected to attend as heads of their respective agencies, while former Blue House Policy Chief Kim Yong-beom is also likely to be called as a witness.
There is a strong possibility that representatives from the asset management industry who have criticized the introduction of single-stock leveraged ETFs will also be selected as witnesses. Predictions suggest that Bae Jae-kyu, CEO of Korea Investment Trust Management, who has been vocal in his criticism, may be among them. Mirae Asset Management, where the sons of Kim and Lee are reportedly employed, is also considered a candidate for witness selection.
The Political Affairs Committee is expected to compile the first list of witnesses this week and finalize the selections by the third or fourth week of this month after discussions between the ruling and opposition party secretaries. The final list of witnesses will be confirmed once the detailed audit schedule for each standing committee is established.
* This article has been translated by AI.
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