South Korea to lower leverage ratio of single-stock ETFs as market sees abnormal volatilities

03-08-2026 17:07 HKT

Raine Fung

A man walks past an electronic screen showing South Korea's benchmark stock index (KOSPI) in a foreign exchange dealing room at the Hana Bank headquarters in Seoul on July 28, 2026. Japanese and Korean shares dived in early trade on July 28, after US semiconductor chip stocks fell following a report of a breakthrough that could boost China's computer chip industry. (Photo by Jung Yeon-je / AFP)

South Korean authorities have allegedly adopted “emergency actions” to amend the Financial Investment Services and Capital Market Act to curb abnormal surges and crashes in the stock market caused by single-stock leveraged exchange-traded funds.

Sources in the South Korean financial sector revealed that the Financial Services Commission and the Financial Supervisory Service are drafting regulations to allow authorities to forcibly reduce the current leverage ratio of single-stock ETFs from the current two times to 1.5 times or lower, in the case where market volatility escalates.

This comes after concentrated bets in single-stock leveraged products exacerbated sharp swings in the local stock market.

It was reported that South Korean authorities are referencing the regulations of Securities and Futures Commission of Hong Kong, which allows asset management companies to adjust leverage ratios according to capabilities.

South Korean financial regulators had previously raised the basic margin requirements for related products from 10 million won (HK$55,000) to 30 million won, taking effect on July 31.

South Korea leveraged ETFs

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