Confusion Over Samsung Electronics and SK hynix Leveraged ETF... Ruling Party Says "Raise Deposits to 50 Million Won," Opposition Calls for "National Assembly Investigation and Special Prosecutor"

[Financial News] The ruling and opposition parties have proposed different solutions to the increased market volatility caused by the Samsung Electronics and SK hynix leveraged ETF (Exchange-Traded Fund (ETF)). The Democratic Party of Korea (DPK) said it may consider stronger measures, including a further increase in the basic deposit requirement, depending on trends after the Lee Jae Myung administration's policy takes effect next month. The People Power Party, meanwhile, argued that the National Assembly should launch an investigation and push for the introduction of a Special Prosecutor.

First, the DPK's K Capital Markets Special Committee visited the Korea Financial Investment Association on the 27th to discuss responses to the Samsung Electronics and SK hynix leveraged ETF. According to Rep. Kim Nam-geun, asset managers and securities firms predicted that if the government's measures, including raising the deposit requirement to 30 million won, are implemented, the number of accounts will fall to 10,000 and trading volume will drop to about 60% of current levels.
Kim said, "We agreed that discussing delisting in a rush would only undermine confidence in the stock market, so we should lower volatility and improve stability by reducing the product's appeal." He added, "After the government's measures take effect in August, we will watch the trend and, if necessary, introduce additional measures."
The additional measures reportedly include raising the deposit requirement further to 50 million won and adjusting the leverage ratio. The government and the ruling party have decided to push for a further deposit hike if needed, while they received a response from the Korea Financial Investment Association that leverage adjustments are technically possible. However, they said they would not review the measure immediately, as it would not be easy to implement.
Kim Yong-beom, Chief Presidential Secretary for Policy, also said on CBS Radio that the government would prepare additional steps if needed after the policy takes effect.

The People Power Party focused on the background behind the launch of the Samsung Electronics and SK hynix leveraged ETF. It suspects the product was rapidly pushed forward under the influence of Kim Yong-beom, the Chief Presidential Secretary for Policy, and was in fact a stock market stimulus measure aimed at the Lee Jae Myung administration's June 3 local elections. Party officials outside the National Assembly described the leveraged ETF as a "massacre of the people's livelihood economy" and called for a National Assembly investigation and the introduction of a Special Prosecutor to hold the financial authorities accountable.
Calls for a National Assembly investigation and a Special Prosecutor over the Samsung Electronics and SK hynix leveraged ETF have also emerged within the party's parliamentary ranks. Senior People Power Party lawmaker Na Kyung-won said, "We must thoroughly investigate through a Special Prosecutor why the launch schedule, originally planned for the second half of this year, was moved up to the first half, whether public funds such as the National Pension Service (NPS) were involved in the process, and whether there were conflicts of interest or abuse of power, including short-term profits made through undisclosed information by forces that colluded with Kim's office."
People Power Party economic policy expert Park Su-young said that among 19 asset managers that submitted opinions on the Samsung Electronics and SK hynix leveraged ETF to the Financial Services Commission (FSC) in February, only three expressed interest in launching the product. He then called for a National Assembly investigation, saying, "The Lee Jae Myung administration ignored the market's voice and pushed this through to boost stock prices ahead of the local elections."
[email protected] Kim Yun-ho, Song Ji-won Reporter