South Korea Accelerates Leverage ETF Risk Controls After Single-Stock Products Hit 73% of KOSPI Volume

According to the Korea Financial Investment Association on July 15, financial authorities are fast-tracking remedial measures for single-stock leveraged ETFs introduced in late May. President Lee Jae-myung directed the Financial Supervisory Service and Korea Exchange to promptly implement safeguards. Proposed measures include enhanced risk warnings tailored to investor age and portfolio profile, mandatory pre-trade education on leverage mechanics and rebalancing costs, and increased minimum deposit requirements.

On July 13's market decline, single-stock leveraged and inverse ETF net assets totaled 13.2 trillion Korean won with daily trading volume reaching 12.2 trillion won. Combined with underlying stock trading, leverage products accounted for 73% of total KOSPI volume. Goldman Sachs attributed the volatility spike to mechanical forced selling by leveraged ETFs, while JPMorgan called them a "significant driver of bi-directional short-term volatility."