South Korea’s financial regulators have decided that if retail investors want to trade leveraged products, they’re going to have to earn the privilege. Starting August 19, 2026, first-time investors looking to trade single-stock leveraged ETFs and ETNs must first complete a mandatory mock trading course, pass educational requirements, and park a minimum of 30 million won (roughly $21,000) in cash before placing a single real order.
What the new rules actually require
The Financial Services Commission and the Korea Exchange designed the requirements with a clear goal: slow people down before they lose their shirts. New retail investors must complete at least five trading days of simulated trading on the KRX platform, logging a minimum of one hour per session. That’s five separate days, not five hours crammed into a single afternoon.
On top of the mock trading, investors must sit through three hours of educational training. The curriculum focuses on the mechanics of leveraged products, including the negative compounding effects that can erode returns even when the underlying stock moves sideways.
The rally, the frenzy, and the reckoning
The Kospi index surged 76% in 2025, powered by a combination of semiconductor demand, AI optimism, and the kind of retail enthusiasm that tends to worry regulators. By June 2026, the index had pushed above 9,300 points.
Then came single-stock leveraged ETFs, which launched on May 27, 2026. The products were an immediate hit. Daily trading volumes surged past 10 trillion won, and assets under management for the new ETFs peaked at 17.6 trillion won shortly after launch. Retail investors piled in, drawn by the promise of amplified returns on already-hot names like Samsung Electronics and SK Hynix.
When the Kospi corrected from its June highs, leveraged products magnified the pain. Retail investors reportedly lost about half of their investments on some holdings between late May and mid-July 2026. By late July, trading volumes collapsed after July 31, and net redemptions hit 1.4 trillion won in just the first week of August, between August 4 and August 10.
Why regulators chose education over prohibition
The educational component targets a specific knowledge gap. Many retail investors who bought leveraged ETFs during the May-June frenzy likely didn’t understand how daily rebalancing works. A 2x leveraged ETF doesn’t simply double your returns over a week or a month. It doubles the daily return, which means that in volatile markets, compounding can work against you even if the underlying stock ends up exactly where it started.
The cash deposit requirement of 30 million won raises the economic stakes of participation. Combined with the time investment of five days of mock trading and three hours of coursework, the total friction is substantial enough to deter casual speculation while remaining accessible to serious investors.