South Korea's Financial Services Commission Requests Spreading Out Rebalancing Trades for Single Stock Leveraged ETFs Across the Trading Day

According to Yonhap News Agency, Lee Eog-weon, Chairman of South Korea's Financial Services Commission, urged asset management companies on Tuesday to distribute their rebalancing trades for single stock leveraged ETFs across the entire trading day in order to curb sharp price fluctuations caused by a high volume of orders concentrated before the market close. Fund management companies typically execute the majority of their rebalancing operations between 3:20 PM and 3:30 PM local time to achieve an investment target of double the daily return of the underlying stock. If these trades are concentrated before the market close, they could accelerate upward trends and deepen downward declines. Lee Eog-weon stated, "There are market concerns that concentrating rebalancing trades before the market close could amplify market volatility. The timing of trades needs to be spread out." He also noted that some products involve over 20 liquidity providers, leading to excessive turnover, increased inter-party trading, and expanded arbitrage activities.