Korean Securities Firms Discuss Raising Minimum Deposit Requirements for Leveraged ETFs on Chip Stocks

Odaily Planet Daily reports that the Korea Financial Investment Association stated that CEOs of 10 major asset management companies in the country discussed introducing investor protection measures for single-stock leveraged ETFs, including raising minimum deposit requirements and diversifying rebalancing transaction times. According to a statement issued by the association, participants agreed on the necessity of increasing the minimum deposit requirement for investing in such leveraged products from the current level of 10 million won ($6,714).

To reduce the market impact of daily rebalancing trades (which are concentrated near the market close), the asset management companies stated that efforts are needed to spread rebalancing activities across different periods of the trading day. They also pointed out the necessity of strengthening the role of liquidity providers as market stabilizers.

The Korea Financial Investment Association cited data from the Korea Capital Market Institute, estimating that the stock trading volume required for daily rebalancing since the launch of related leveraged ETFs is approximately between 700 billion won and 2.1 trillion won. (Sina Finance)