Overview
- The government convened an emergency market meeting on July 29 and senior officials publicly apologized as the KOSPI plunged following a sharp sell-off in Samsung and SK Hynix that magnified losses in newly listed single-stock 2x leveraged ETFs.
- Immediate steps include a halt to new listings, a ban on advertising for these products, round-the-clock market monitoring, and a raised minimum cash deposit to 30 million won that takes effect on July 31.
- Officials and regulators are proposing further measures such as capping individual holdings at about 20 percent of an investor’s total portfolio, requiring simulated trading and longer mandatory education, and imposing higher costs on excessive orders.
- Asset managers agreed to spread rebalancing trades across the day and reduce liquidity-provider volumes to limit concentrated selling that had amplified price swings for ETFs that aim to deliver twice the daily move of a single stock.
- The intervention reflects concern that rapid retail inflows—reported near 14 trillion won—into high-leverage products tracking a few chip giants created concentrated risk and could lead regulators to restrict access to professionals or cut leverage if volatility persists.