"We expected 50 million won"... skepticism grows that 'existing investors can't be stopped' [Leverage ETF measures, examined 1]

[Financial News]"We thought it would be at least 50 million won."That was the repeated reaction in investor communities after the financial authorities announced that they would raise the cash deposit requirement for single-stock leveraged exchange-traded products, including ETFs and ETNs, to 30 million won. It was the first supplementary measure aimed at cooling an overheated market, but investors focused less on the strength of the regulation than on why the threshold was set at 30 million won.■"From 12 trillion to 4 trillion"... how was 30 million won calculated?According to the financial investment industry on the 17th, the Financial Services Commission, the Financial Supervisory Service, the Korea Exchange and the Korea Financial Investment Association announced the previous day a set of supplementary measures for single-stock leveraged ETFs and ETNs.
The key point is to tighten the cash requirement for buying single-stock leveraged products. Until now, investors could meet the 10 million won basic deposit requirement by combining cash with substitute collateral such as stocks, ETFs and bonds. Going forward, they must hold 30 million won in cash each time they place a buy order. The exception that allowed securities firms to lower deposit requirements based on trading experience will also not apply to single-stock leveraged products.
The market reacted with skepticism. Even with a stricter cash requirement, it would not become a meaningful barrier for investors already trading in the tens of millions or hundreds of millions of won. Critics also noted that the regulation appears to target individual investors rather than foreign or institutional players.
The FSC said its internal estimate showed that applying the 30 million won cash threshold would reduce the current market size of about 12 trillion won for single-stock leveraged products to 4 trillion-5 trillion won, roughly the level seen at launch. However, it did not release the detailed analysis behind that estimate, including account distribution, trading volume or the expected decline in turnover.
The FSC explained that there is no absolute formula for the 30 million won figure. It said the threshold was set after taking into account investors' cash capacity, the expected drop in demand and the risk of excessive market contraction.
An industry official said, "They presented a specific forecast that the 12 trillion won market could be reduced to at least 4 trillion won, but they did not disclose how they reached that calculation." The official added, "If a regulation is meant to limit investors' choices, then objective evidence and an analysis of its effects should be provided as well."■Disappointment selling followed the announcement... "Only a partial adjustment to existing rules"The market's response was cold.
On the 16th, the KOSPI closed at 6,820.60, down 463.81 points, or 6.37%, from the previous session. The KOSDAQ also fell 37.59 points, or 4.53%. With foreign investors and institutions selling together, sidecar mechanisms were triggered in both the main and tech-heavy markets.
After the policy announcement, disappointment selling poured in. Samsung Electronics fell 8.77% during regular trading and widened its decline to 9.30% in the NextTrade after-market. SK hynix dropped 11.53% in regular trading and 12.10% after hours.
Kang Jin-hyuk, senior researcher at Shinhan Investment & Securities, said, "This supplementary measure for single-stock leveraged ETFs is being interpreted as only a partial adjustment to existing rules." He added, "After the policy was announced at 4 p.m., disappointment selling emerged in Samsung Electronics and SK hynix on NXT."
He added that profit-taking was encouraged by lingering doubts over semiconductor earnings, along with policy variables related to data centers and caution ahead of ChangXin Memory Technologies (CXMT)'s IPO.
The financial authorities said it is too early to judge the policy's effectiveness based only on the basic deposit requirement, since the measures also include a temporary suspension of new listings, a ban on advertising, expanded pre-investment education and higher trading units.
A securities industry official said, "What the market is curious about is not the strength of the regulation, but the design of the policy." The official added, "If market volatility was severe enough to force a policy change, then the regulation should have been persuasive enough to match that level. The fact that questions about whether 30 million won is enough were raised from the first day of the announcement itself shows the limits of this measure."


dschoi@fnnews.com Choi Doo-sun Reporter