Financial authorities to review possible improvements to the ‘Samsung Electronics and SK Hynix leverage’ measures
Financial authorities said 7month 10day, they would consider revising the system for leveraged exchange-traded funds (ETFs) on individual stocks if necessary. They also asked brokerages to come up with investor protection measures, and the presidential office said that institutional review was also needed.
Financial authorities said 7month 10day that they would revise the system if needed for leveraged ETFs on individual stocks. The remarks came as concerns grew that the products’ volatility could affect investors’ accounts.
Financial authorities asked brokerages to prepare investor protection measures. The requested steps were reported to include stronger risk disclosures and guidance on trading precautions.
The presidential office said that day that it was considering the system for leveraged products tied to individual stocks. The remark indicated that it was formally reviewing the need for institutional improvements.
The product in question is a single-stock leveraged ETF based on Samsung Electronics and SK Hynix. Some reports referred to the product as “Samjeonnix,” saying that investor losses are increasing in a sideways market.
Market participants explained that in a sideways market, a leveraged structure amplifies not only returns but also losses. It was reported that remarks from the financial authorities and the presidential office reflected attention to this phenomenon.
The financial authorities have not disclosed specific corrective measures at this time. There is an explanation that securities firms have been instructed to strengthen customer guidance and internal risk management.