Trading in South Korea’s single-stock leveraged exchange-traded funds lost momentum after regulators raised entry requirements and added trading restrictions, hitting products tied to Samsung Electronics and SK Hynix. According to the figures cited by Newsis, eight SK Hynix-linked products recorded net selling of about KRW 1.2415 trillion, while eight Samsung Electronics-linked products saw net selling of about KRW 531.6 billion.
The slowdown also showed up in turnover. The 16 products posted average daily trading value of about KRW 11.6787 trillion from their listing in May through July 30, but that fell to roughly KRW 1.0059 trillion in August, a drop of more than 90%. The report said current activity is only about 8% of the level seen before the regulatory steps took effect.
South Korea began tightening the rules on July 31 by raising the base margin requirement for single-stock leveraged ETFs from KRW 10 million to KRW 30 million. Starting Aug. 19, investors must complete simulated trading before they can trade the products. Regulators also plan to increase the minimum trading unit to 20 shares before November. Before the curbs, retail investors had piled into the sector, with cumulative net buying of about KRW 15.2876 trillion between May 27 and July 30.
South Korea’s tighter rules on single-stock leveraged exchange-traded funds have sharply reduced trading tied to Samsung Electronics and SK Hynix.
By product, eight SK Hynix-linked funds recorded net selling of about KRW 1.2415 trillion, while eight Samsung Electronics-linked funds posted net selling of about KRW 531.6 billion.
Trading activity also cooled sharply. The 16 products averaged about KRW 11.6787 trillion in daily turnover from their May listing through July 30. In August, that figure dropped to about KRW 1.0059 trillion, down more than 90%. Current turnover stands at only about 8% of the level seen before the regulatory measures took effect.
Rules tightened from July 31
The regulatory tightening began on July 31. South Korea’s financial regulators raised the base margin requirement for single-stock leveraged ETFs from KRW 10 million to KRW 30 million.
From Aug. 19, investors must complete simulated trading before they can trade the products. Regulators also plan to raise the minimum trading unit, with an adjustment to 20 shares expected before November.
Retail investors had piled in before the curbs
Before the new rules, single-stock leveraged ETFs had been heavily favored by South Korean retail investors. Between May 27 and July 30, individual investors were cumulative net buyers of about KRW 15.2876 trillion across the 16 products. Of that total, SK Hynix-linked products attracted about KRW 9.9365 trillion, and Samsung Electronics-linked products drew about KRW 5.3511 trillion.
Some market participants also expressed concern that restricted leveraged capital could shift into index-based or overseas leveraged ETFs, leaving the effect of the regulatory measures still to be tested.
The report was cited from Newsis.
This article was originally published by Bit.Fan. For more cryptocurrency news and market insights, visit www.bit.fan. Disclaimer:
The market information, project data, and third-party content displayed on this platform are for industry information sharing only and do not constitute any form of investment advice or return commitment.
Cryptocurrency trading carries high risks. Users should fully assess their risk tolerance and make independent decisions. All profits, losses, and legal responsibilities are borne by the users themselves.
