South Korea's Financial Services Commission Requires Dispersing Rebalancing Trades of Single-Stock Leveraged ETFs Throughout the Trading Day

Odaily Planet Daily News According to Yonhap News Agency, South Korea's Financial Services Commission Chairman Lee Eog-weon urged asset management companies on Tuesday to disperse single-stock leveraged ETF rebalancing trades throughout the trading day in order to curb the severe price fluctuations caused by a large number of orders before the market close. Fund management companies typically concentrate most of their rebalancing operations between 3:20 PM and 3:30 PM local time to achieve an investment goal 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 downturns. Lee Eog-weon stated, "There is market concern that concentrating rebalancing operations before the market close could amplify market volatility. The timing of trades needs to be dispersed." He also noted that some products involve more than 20 liquidity providers, leading to excessive turnover rates, increased inter-party trading, and expanded arbitrage activities.