Huo Xing Finance reports, according to South Korean media NATE, that South Korea’s financial regulators are advancing revisions to the Capital Markets Act, aiming to grant regulatory authorities “emergency intervention powers” to directly implement market-stabilizing measures during periods of severe market volatility. The Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) have already initiated legal revision efforts, focusing particularly on single-stock leveraged ETFs, which were deemed to have amplified volatility during recent market crashes. Proposed regulatory measures include adjusting leverage ratios and imposing investment caps to reduce risks associated with concentrated trading during abnormal market fluctuations. Additionally, regulators are considering setting individual investment limits on single-stock leveraged ETFs, uniformly capping allocations at approximately 20% to prevent excessive capital concentration, and introducing a real trading simulation system to enhance investor understanding of leverage product risks. South Korean regulators stated that raising the initial margin requirement primarily raises the investment threshold, while investment limits act as a “cap” on capital inflow—both forming a complementary risk control framework. Previously, on July 31, South Korea raised the minimum margin requirement for single-stock leveraged ETF investors from KRW 10 million to KRW 30 million. Data shows that on the first day of the new rules’ implementation, trading volume for the 16 related leveraged ETFs totaled approximately KRW 3 trillion—about one-quarter of the KRW 12.4 trillion traded the previous day and roughly 80% lower than the KRW 15 trillion level on July 29.
South Korea Considers Emergency Intervention Powers for Financial Regulators
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Summary
South Korea is moving to grant financial regulators emergency powers to curb extreme market volatility, with a focus on leveraged ETFs. The FSC and FSS plan to adjust leverage ratios, impose investment caps, and limit individual holdings to 20%. A new 30 million KRW margin requirement took effect on July 31, causing a sharp decline in trading volume. Traders are now turning their attention to altcoins amid rising Fear & Greed Index readings.
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