South Korea plans to lower the leverage multiple of single-stock leveraged ETFs from 2 times to 1.5 times, with relevant discussions currently underway.

According to The Korea Herald, the K-Capital Market Special Committee under South Korea’s ruling Democratic Party is studying lowering the leverage multiple of leveraged and inverse ETF products tracking individual stock price movements from 2 times to 1.5 times. The proposal follows President Lee Jae-myung’s instruction to “formulate response measures”, with committee chairman Gu Jae-myung confirming on the 22nd that relevant discussions are ongoing. These products were launched during the Moon Jae-in administration, under the policy backdrop of the KOSPI index’s 5,000-point target, and now face adjustments as the index approaches that goal. The special committee is also discussing raising the threshold for convening “beneficiary meetings” — currently, investors holding more than 5% of total subscription shares can call such meetings — to a higher bar, to prevent excessive speculation in leveraged products. Some academics, including professors from Sejong University and Seoul National University, support the move, saying it will boost investment safety and curb excessive volatility. The Financial Services Commission responded that no specific proposals have been submitted for discussion yet. In contrast, Chairman Oh Moon-kyung and others proposed alternative measures such as prioritizing expanding the scale of “liquidity providers (LPs)”, stressing that single-stock ETFs like Samsung Electronics and SK Hynix have performed well recently, so major increases in listing restrictions should be avoided.