South Korean financial authorities are moving to accelerate the implementation of new, stricter deposit requirements for single-stock leveraged exchange-traded funds (ETFs). Initially scheduled for early next month, the measure to increase the basic deposit requirement from ₩10 million to ₩30 million for new purchases or additions to single-stock leveraged ETF holdings is now reportedly being expedited to the end of July. This acceleration follows a directive from President Lee Jae Myung, who called for the swift implementation of measures related to these financial products.
The regulatory changes also include a push to accept only cash for basic deposits, rather than the current system which allows substitute securities like stocks and bonds. Authorities are also considering accelerating the exclusion of substitute securities from being recognized as basic deposits. These measures are designed to curb speculative trading in these volatile products, which saw daily turnover exceed ₩18 trillion and some products lose more than half their value in a single month.
The Financial Services Commission (FSC) had previously announced these safeguard measures on July 16. Other changes include expanding the ETF minimum trading unit from 1 share to 20 shares (originally set for November) and strengthening accountability for tracking errors by asset managers and securities firms. The deposit increase was originally scheduled for August 5, and the exclusion of substitute securities for August 19. The president's push has prompted the FSC to coordinate with the Korea Financial Investment Association, securities firms, and asset managers to implement the safeguards as quickly as possible, prioritizing speed over new rules.
