Seoul:The head of South Korea's financial regulatory body has refuted claims that the introduction of single-stock leveraged exchange-traded funds (ETFs) was directed by the presidential office.
According to Yonhap News Agency, Financial Services Commission (FSC) Chairman Lee Eog-weon addressed these allegations during a parliamentary audit at the National Assembly. He explained that the decision was made after considering a range of opinions, responding to an inquiry from an opposition lawmaker about the motives behind the launch.
In May, the listing of 16 single-stock leveraged ETFs on South Korea's main bourse resulted in significant market volatility. In response, the government increased the minimum cash deposit required for investing in these ETFs from 10 million won to 30 million won (approximately US$22,400) in late July to mitigate the volatility.
Lee mentioned that there were prior demands for the introduction of single-stock leveraged ETFs, as they are available overseas but had not been in Korea until then.
He also disputed a market estimate that claimed individual investors have incurred losses of about 54 trillion won from these ETFs, asserting that the figure is inaccurate. Despite acknowledging the rationale behind the policy's introduction, Lee expressed regret over the losses and concerns it has caused.