South Korean financial regulators have disclosed aggregate investor losses in single-stock leveraged exchange-traded products for the first time, putting estimated losses at KRW 2.3 trillion, or about $1.7 billion, between May 27 and Aug. 14 after the products were introduced in May. The figures cover data compiled from 10 major Korean brokerages, meaning they do not represent total losses across all investors in the country. Regulators began tightening rules in July after initially encouraging the launch of such products in the domestic market in May. Measures rolled out since then include a temporary ban on listing new related products, higher minimum cash margin requirements for investors, and mandatory training before trading. The shift shows that South Korea’s regulatory stance moved from promotion to restriction in less than two months as concerns around high-leverage single-stock products grew.
Data compiled by South Korean financial regulators shows that investors are estimated to have lost KRW 2.3 trillion, or about $1.7 billion, in the months after single-stock leveraged exchange-traded products were introduced in May.
The disclosed period runs from May 27 to Aug. 14. Regulators said this is the first time they have released the overall scale of losses suffered by Korean investors in these high-leverage single-stock products.
Figures cover 10 major brokerages
The data only includes 10 major Korean securities firms, so it does not represent the total losses of all Korean investors in leveraged products.
Regulatory stance shifted in less than two months
Since July, regulators have rolled out measures to restrict trading in leveraged single-stock products. Those steps include a temporary ban on listing new related products, higher minimum cash margin requirements, and mandatory training for investors before they trade.
That marks a clear policy shift in less than two months, from encouraging the launch of such products in the local market in May to limiting their expansion from July.
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