Lee Chan-jin: “Review of single-stock leveraged ETFs was rushed to meet the listing schedule”

[Financial News] Lee Chan-jin, Governor of the Financial Supervisory Service, said the review of single-stock leveraged exchange-traded funds (ETFs) was rushed in part to meet the listing schedule. He said he would compile information on individual investors’ mark-to-market losses and submit it to the National Assembly before the comprehensive audit.
At the National Policy Committee’s audit of the Financial Supervisory Service on the 19th, Lee said the review had been expedited in part to meet the listing schedule. He was responding to a question from People Power Party lawmaker Park Dae-chul about how single-stock leveraged ETFs had been reviewed.
Rep. Park pointed out that ETFs are usually reviewed by the Financial Supervisory Service after completing the Korea Exchange’s preliminary review, but that the FSS began reviewing single-stock leveraged ETFs before the exchange’s preliminary review was complete. Asked whether this was the first time such a process had been used, Lee replied, “From what we’ve checked, it seems so.”
Rep. Park also took issue with the Financial Services Commission’s advance announcement of a May 27 listing plan before the review was complete. “I think they opened the door too hastily,” he said, adding, “The responsibility that comes with that is bound to be heavy.”
He criticized the review, saying that while general ETFs took an average of 62 days to list and benchmark-index products took 43 days, single-stock leveraged ETFs took just 29 days. “A riskier product was reviewed in less time,” he said.
Oversight of asset managers’ advertising after the launch also came under scrutiny. People Power Party lawmaker Cho Jung-hoon pressed the FSS on its response, saying that extensive advertising, including at baseball stadiums, had been carried out when the product launched in late May.
Rep. Cho said, “Banning advertising altogether is itself an admission that the previous advertising was excessive.” He went on to ask whether restrictions on product names and advertising language had been properly observed and whether violations had been sanctioned, and requested materials on the oversight of asset managers.
Lee replied, “We actually don’t have the materials at the moment.” When Rep. Cho followed up, asking whether that meant there had been no cases of asset managers being supervised, Lee said, “I’ll check and get back to you.”

[email protected] Lee Jeong-hwa Reporter