SEOUL — South Korea’s chief financial watchdog says it plans to roll out new regulations targeting single-stock leveraged exchange-traded funds in the near future.
Financial Services Commission Chairman Lee Eog-weon made the announcement during a radio interview on Thursday, saying the agency would “closely inspect and review improvement measures” related to these investment products. He was responding to questions about how the funds have contributed to increased volatility in South Korea’s stock market.
“This is basically a high-risk product,” Lee said. “We have explained to investors its risks.”
When asked whether a temporary halt to trading in these products was on the table, Lee cautioned that such a move could trigger a “bigger side-effect” in the markets, suggesting regulators are weighing their options carefully.
Beyond the ETF issue, South Korea’s regulators have been focused more broadly on strengthening market stability. Their efforts include encouraging companies to improve how they are governed and to raise dividend payments to shareholders, as well as pushing for South Korea’s entry into the MSCI developed-market index — a move that could draw more long-term institutional investment into the country’s financial markets.
