Presidential Office policy director Kim Yong-beom rejected calls to delist single-stock leveraged exchange-traded funds (ETFs) during an appearance on KBS1's '일요진단 라이브' program on the 19th, stating such a move is 'hard to imagine' given the market's scale has exceeded 10 trillion won with existing investor positions. Kim explained that delisting would itself deliver tremendous market shock and create the problem of unwinding accumulated holdings. The Presidential Office's stance comes after authorities recently implemented supplementary measures including raising the basic deposit requirement to 30 million won in cash and setting a minimum trading unit of 20 shares for leveraged ETF transactions.
Kim Yong-beom Endorses Recent Regulatory Measures for Leveraged ETFs
Kim Yong-beom positively assessed the supplementary measures authorities recently introduced for leveraged ETF trading. The measures include raising the basic deposit requirement to 30 million won in cash and setting the minimum trading unit at 20 shares. Kim stated these steps can substantially reduce side effects associated with leveraged products.
Presidential Office Identifies End-of-Day Concentration and Tracking Error as Key Issues
Kim Yong-beom emphasized the need for additional measures to address end-of-day concentration and tracking error expansion in leveraged ETF trading. He stated that authorities, asset management companies, and securities firms must hold further discussions to minimize market impact from leveraged products, noting that such products have doubled influence during down markets. Kim specifically pointed out that volatility can expand as leveraged ETF trading concentrates just before market close, stating 'we must consider various methods to minimize the impact these products have on the market at specific times and periods.' He also presented tracking error management as an additional task, explaining 'we must minimize the tracking error' and 'we can further discuss methods to optimize the selling burden that occurs in the process of adjusting tracking error,' referring to the gap between net asset value (NAV) and market price.
FAQ
Why did Kim Yong-beom reject delisting single-stock leveraged ETFs?
Kim stated that delisting is 'hard to imagine' because investors have already invested in these products and the market scale has formed at over 10 trillion won. He explained that delisting would itself deliver tremendous market shock and create the problem of unwinding accumulated holdings.
What regulatory measures did authorities recently implement for leveraged ETFs?
Authorities raised the basic deposit requirement to 30 million won in cash and set the minimum trading unit at 20 shares for leveraged ETF transactions.
What additional issues did Kim Yong-beom identify requiring further discussion?
Kim identified end-of-day trading concentration that can expand volatility and tracking error management between net asset value (NAV) and market price as key issues requiring additional measures through discussions among authorities, asset management companies, and securities firms.
