South Korea's Single Stock Leveraged ETFs Exceed 10 Trillion Won, Delisting Measures Difficult to Implement
The head of the policy office at the South Korean presidential office, Kim Yong-bum, stated that the government will study additional measures to improve the single stock leveraged ETFs that have recently caused fluctuations in the stock market, but it is difficult to implement delisting measures. Currently, the scale of these ETFs has exceeded 10 trillion won, and investors are already participating in trading. Forcibly delisting them would have a huge impact on the market, making it unrealistic. These products were launched after thorough discussions to meet investment demands and attract foreign capital back to the Korean market. Kim Yong-bum pointed out that these products have structural risks that need further optimization, particularly in managing the deviation rate between the ETF and the underlying asset prices. Leveraged ETFs may see concentrated trading during rapid market fluctuations, leading to increased selling pressure in a short period. Regulatory agencies, asset management companies, and securities firms need to discuss how to reduce the impact of these products on the market during specific periods, including whether adjustments need to be completed within 30 minutes, whether adjustment times can be extended, and whether risk management can be conducted through other derivative methods.
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