Korean securities firms discuss raising minimum deposit requirements for leveraged ETFs on chip stocks

Odaily reported that the Korea Financial Investment Association stated that CEOs of 10 major asset management companies in the country discussed investor protection measures for single-stock leveraged ETFs, including raising minimum deposit requirements and diversifying rebalancing trade execution times. According to a statement issued by the association, attendees 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 currently concentrated near the market close, the asset management companies indicated the need to distribute rebalancing activities across different trading sessions. They also pointed out the need to strengthen the market stabilization role of liquidity providers.

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