South Korea tightens curbs on single-stock leveraged ETFs after market selloff

South Korea’s market turmoil and the backlash over single-stock leveraged exchange-traded funds tied to Samsung Electronics Co. and SK Hynix Inc. have escalated into an around-the-clock response by financial authorities, with Financial Supervisory Service Governor Lee Chan-jin postponing planned summer leave and Financial Services Commission Chairman Lee Eok-won canceling vacation plans entirely. The moves come as the government prepares another round of restrictions after a sharp selloff in local equities and criticism that concentrated retail trading in the products amplified volatility. At an emergency market review meeting in Seoul on July 29, officials said they would introduce a cap on each retail investor’s total exposure to the products, with 20% cited as an example, while also preparing higher trading charges for repeated excessive orders, a simulated-trading program and a legal basis for regulators to reduce leverage ratios during periods of market stress. Those steps build on previously announced curbs, including a 30 million won ($21,700) minimum cash deposit requirement for additional purchases starting July 31, applying to both domestic and overseas single-stock leveraged products. Lee Chan-jin had originally planned to take five days of leave from August 3 through August 7, but worsening conditions and political pressure made an absence difficult as the Financial Supervisory Service shifted into what market participants view as an emergency footing. Lee had previously acknowledged a policy failure over the products, saying he "should have blocked them even if it meant lying down in front of them." Lee Eok-won also scrapped leave as the Financial Services Commission prioritizes real estate finance measures, additional responses on the Samsung-SK hynix leveraged ETFs and a forthcoming governance reform plan for financial companies.