"Samsung Electronics and SK hynix leveraged ETF" leverage products plunge 47% on average in a month... key regulations delayed until August and November [Leveraged ETF measures, examined 2]

[Financial News]"Prepare follow-up measures quickly."That was President Lee Jae Myung's instruction regarding single-stock leveraged exchange-traded products (ETFs and ETNs) tied to Samsung Electronics and SK hynix at the "2026 second-half ministry briefing" held at the Yeongbingwan State Guest House on the 15th.
The financial authorities announced follow-up measures the very next day, on the 16th. But the key steps that would directly curb investor demand will not take effect until next month, and the expansion of trading units has been pushed back to November. With investor losses already snowballing, critics are saying, "The accounts are melting now, but the safeguards will only kick in later."■ Key regulations delayed until August and November, despite the call for speedAccording to the financial investment industry on the 18th, most of the core investor protections in the FSC's follow-up plan for single-stock leveraged products will not be implemented until after August. Measures that take effect immediately include a temporary suspension of new listings and a ban on advertising and event-style marketing. The key steps that would actually limit additional buying and reduce product demand will be delayed by at least three weeks and as long as four months.
The minimum deposit requirement will rise from 10 million won to 30 million won around Aug. 5. A measure that will recognize only cash as margin, excluding substitute securities such as stocks and bonds held in an account, is set to take effect around Aug. 19. The plan to raise the trading unit for domestic single-stock leveraged products from the current one unit to 20 units is scheduled for November.
The FSC said time is needed to revise and test the computer systems of securities firms and the exchange. Byun Je-ho, director of the FSC's Capital Markets Bureau, said, "We need time to upgrade securities firms' computer systems and test whether they work without errors with existing systems." He added, "We plan to recommend restricting new trades for securities firms that fail to complete development within the deadline."
But the industry is criticizing regulators for moving too late after already recognizing the overheating and loss risks, and then delaying implementation again by citing securities firms' system development.
A securities industry official said, "If Samsung Electronics and SK hynix move about 10% in a single day, leveraged investors can lose nearly 20% of their principal in just one day." The official added, "The product size has nearly tripled in a little over a month, and prices have swung sharply. It is questionable whether the authorities have properly grasped the scale of investor losses."
Another industry source said, "Before waiting for system development, they should have first introduced measures that could be implemented immediately, such as restricting new purchases for a certain period or setting temporary order limits." The source added, "If market stability is urgent, pushing the most effective measures back by one month to several months is hard to justify."■ Samsung Electronics down 30%, SK hynix down 37% in a monthInvestor losses have already grown sharply. The bigger problem is that, amid volatile trading, the wide daily swings have made stable investment decisions difficult in the first place.
According to Korea Exchange data over the past month, Samsung Electronics fell 29.8% from its closing high of 362,500 won on June 18 to its low of 254,500 won on the 13th. SK hynix plunged 36.9% from its peak of 2,919,000 won on June 22 to its low of 1,842,000 won on the 16th.
Even when measured from May 27, when the single-stock leveraged products were launched, the declines were still steep. Samsung Electronics fell 16.9% from 307,000 won on May 27 to 255,000 won on the 16th. SK hynix also dropped 17.9% over the same period, from 2,243,000 won to 1,842,000 won.
Losses in single-stock leveraged ETFs and ETNs that track these stocks at twice the movement were far greater. The average decline over the past month for 14 single-stock leveraged products based on Samsung Electronics and SK hynix was 47.1%. All 14 products fell by more than 45%, and they accounted for 14 of the 24 worst-performing ETFs in Korea.
The losses appear to have widened because the products amplified the underlying stock declines twofold, while the structure that rebalances daily returns during sharp price swings also caused volatility decay.
Lee Jae-won, a researcher at Yuanta Securities Korea, said, "Expectations for the launch of measures on single-stock leveraged ETFs also failed to act as a trigger for a market rebound." He assessed that "volatility from leveraged ETFs and the absence of net buying by a leading investor group pushed the index down to valuations below those seen during the financial crisis."

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