FSS Governor Lee Chan-jin acknowledged on July 13 that resolving issues with single-stock leveraged products will be difficult due to structural problems, stating that no clear answer is expected. Lee made the remarks at a meeting with CEOs of 20 asset management companies held at the Korea Financial Investment Association. The products, which allow 2x leveraged bets on Samsung Electronics and SK Hynix stock movements, launched on May 27 and have been identified as amplifying market volatility, with the KOSPI experiencing extreme swings and circuit breakers triggering at unprecedented frequency.
FSS Governor Lee Acknowledges Difficulty Resolving Leveraged Product Issues at July 13 CEO Meeting
At the July 13 meeting with asset management CEOs, Lee stated that government authorities will announce their position on leveraged ETFs soon, but emphasized that the issue will require continuous monitoring, modification, and supplementation rather than a one-time resolution. Lee did not elaborate on the specific structural problems, though he noted that delisting is impractical given that individual investors have net purchased nearly 10 trillion won of the products, and that reversing products introduced through regulatory amendments involving the Blue House, Financial Services Commission, and Korea Exchange could undermine legal trust.
Lee added that the matter does not appear to be one where a specific person can make a decisive determination, and that authorities are deliberating extensively. He stated that the FSS will do its best within its capacity and primarily serve as a scapegoat, while asset management companies should frankly communicate substantive and institutional requests to inform policy decisions. During the public portion of the meeting and post-meeting press availability, Lee declined to comment on single-stock leveraged products, but made these remarks during the closed-door session.
KOSPI Volatility Statistics Post-Product Launch
According to NH Investment & Securities, KOSPI experienced 3% or greater daily moves on 27% of trading days (26 out of 96 days) before the single-stock leveraged product launch. After the May 27 launch through July 13, such moves occurred on 52% of trading days (17 out of 33 days). By comparison, the US S&P 500 index has not experienced a single 3%+ daily move in 2026.
According to Korea Exchange data, the securities market triggered circuit breakers (sidecar) 35 times from the start of 2026 through July 13 (17 buy-side, 18 sell-side), compared to just 3 times in the entire previous year. This surpassed the previous record of 26 triggers set during the 2008 global financial crisis. Full trading halts (circuit breakers) have been triggered 7 times in 2026 alone, representing more than half of the 13 total triggers since the mechanism was introduced in 2000. The Wall Street Journal noted that volatility in Korean stocks has been amplified by leveraged products on Samsung Electronics and SK Hynix.
The KOSPI has fallen over 25% from June 22 through July 13. On June 22, Lee had stated that he personally regrets not blocking the single-stock leveraged products and that he should have done everything to prevent their introduction. The KOSPI fell 10% the day after Lee's June 22 remarks.
Financial Services Commission Schedules Industry Expert Meeting for July 14
The Financial Services Commission will meet with experts from major securities firms and asset management companies on July 14 in a closed-door session to discuss supplementary measures for single-stock leveraged products. Potential measures under discussion include raising the minimum deposit amount that investors must place in accounts and strengthening pre-investment education requirements.
FAQ
What did FSS Governor Lee Chan-jin say about single-stock leveraged products on July 13?
At a July 13 meeting with asset management CEOs, Lee stated that resolving issues with single-stock leveraged products will be difficult due to structural problems and that no clear answer is expected. He indicated that government authorities will announce their position soon but that the issue will require continuous monitoring and adjustment rather than a one-time resolution.
How has KOSPI volatility changed after single-stock leveraged products launched on May 27?
According to NH Investment & Securities, KOSPI experienced 3% or greater daily moves on 52% of trading days (17 out of 33 days) after the May 27 product launch through July 13, compared to 27% of trading days (26 out of 96 days) before the launch. Circuit breakers have been triggered 35 times in 2026 through July 13, compared to 3 times in the entire previous year.
What measures is the Financial Services Commission discussing for July 14?
The Financial Services Commission will meet with experts from major securities firms and asset management companies on July 14 to discuss supplementary measures including raising minimum deposit requirements and strengthening pre-investment education for single-stock leveraged products.
