Korea to Require New Investors in Single-Leveraged ETFs to Complete Simulated Trading Practice

Odaily News - South Korea will require new investors in single-leveraged exchange-traded funds (ETFs) to undergo simulated trading practice, further tightening regulations on these high-risk products that exacerbate market volatility. The Financial Services Commission announced that new investors purchasing single-leveraged ETFs must complete at least five days of simulated trading, with a total duration of at least five hours. The new rules will take effect on August 19 and apply to both domestic and overseas related investments. This marks another move by South Korean regulators to restrict retail participation in leveraged ETF trading.

Previously, sharp declines in these products led to billions of dollars in investor losses. Regulators had earlier raised the minimum cash deposit requirement for such trades to 30 million won (approximately $21,000) and extended the mandatory online training time for new investors in single-stock leveraged products to three hours.