Lee Eok-won, chairman of the Financial Services Commission, stated that if demand related to single-stock leveraged exchange-traded funds (ETFs) does not sufficiently subside, the government will pre-review additional measures such as setting individual investment limits.

The Financial Services Commission discussed supplementary measures with the financial investment industry on the 28th in response to market instability surrounding single-stock leveraged products.

The government plans to implement existing measures such as strengthened basic deposit requirements and expanded preliminary education early, while reviewing additional strengthening of investment requirements and setting individual investment limits if market overheating persists.

The industry was also asked to actively participate in market stabilization efforts through dispersed rebalancing and improved liquidity supply.

Lee Eok-won, Chairman of the Financial Services Commission [Provided by Yonhapnews]

▲ Basic Deposit Cash Requirement of 30 Million Won Strengthened and Applied Early on July 31st… New Listings and Advertising Suspended

The government decided to significantly accelerate the implementation timeline of supplementary measures announced on the 16th to stabilize demand and strengthen investor protection.

Accordingly, new listings and marketing advertising were provisionally suspended immediately upon announcement, and the measure to raise basic deposit requirements to 30 million won in cash will be implemented early on July 31st.

The expansion of minimum transaction units is also expected to be implemented ahead of schedule, and plans are in place to proceed without delay with enhanced preliminary education evaluation and additional one-hour education based on case studies, as well as tightened divergence rate management measures (August 19th).

▲ If Overheating Exceeds Fee and Investment Period Standards, 'Individual Investment Limits' Will Be Further Reviewed

The government explicitly stated that it is preparing stronger additional measures in advance in case market overheating does not subside even after the basic deposit requirement strengthening measure implemented on the 31st.

Specifically, options were discussed to further raise investment requirements, such as establishing periodic re-education and new prerequisite investment experience requirements.

Furthermore, the government decided to review and prepare aggregate management measures such as 'setting individual investment limits' that restrict investments within a certain percentage (for example, 20%) of the total amount of financial investment products.

▲ Preventing Concentration at Market Close… Asset Managers Urged to Disperse Rebalancing, Securities Companies Urged to Adjust Liquidity

Strong requests were also made for voluntary efforts to mitigate volatility in market operations.

Asset management firms were urged to disperse rebalancing times throughout trading sessions to address the problem of single-stock leveraged product rebalancing concentrating just before market close and amplifying market volatility.

Securities firms serving as liquidity providers (LPs) were emphasized the need for market stabilization efforts where the industry appropriately adjusts liquidity on its own based on expertise, rather than uniform regulation.

Financial investment industry representatives who attended the meeting also responded positively, pledging active cooperation with government measures and efforts to establish voluntary best practices.