Global Market: South Korea accelerates tougher ETF trading rules to curb market volatility

South Korea's financial regulator has brought forward stricter trading requirements for retail investors dealing in single-stock leveraged exchange-traded funds (ETFs), as authorities seek to rein in speculative activity and reduce market volatility, Reuters reported.

The Financial Services Commission (FSC) said on Friday that retail investors will now be required to maintain a cash deposit of 30 million won ($20,437) to trade single-stock leveraged ETFs from July 31, earlier than its previous plan to introduce the measure sometime in August, Reuters reported.

According to Reuters, the regulator accelerated the timeline in response to heightened market volatility following the launch of the products.


The move is aimed at curbing speculative trading by retail investors. Domestic single-stock leveraged ETFs linked to Samsung Electronics and SK Hynix, which received regulatory approval in late May, have drawn criticism for contributing to increased swings in the market, Reuters reported.

Leveraged ETFs amplify the daily returns of their underlying assets, offering the potential for higher gains but also exposing investors to larger losses. Regulators have increasingly tightened oversight of such products amid concerns over risks to retail investors and broader market stability.

The FSC said the earlier implementation of the higher deposit requirement is intended to strengthen investor safeguards and help stabilise trading in the newly introduced leveraged ETF segment.

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