South Korean Lawmaker Ahn Cheol-soo Calls for Delisting Measures on Single Stock Leverage ETFs
Ahn Cheol-soo, a member of the South Korean National Power Party, publicly called for strong measures, including delisting, against single stock leverage ETFs tracking Samsung Electronics and SK Hynix, stating that the KOSPI has become a casino.
Currently, the funds flowing into the leverage ETFs for Samsung Electronics and SK Hynix have reached 212 trillion won, with the two companies accounting for about 60% of the total market capitalization of KOSPI. This year, the South Korean stock market has triggered the circuit breaker mechanism 31 times and has experienced 5 halts, with the fear index peaking at 90.8.
After the launch of the first batch of domestic single stock 2x leverage ETFs at the end of May, severe price deviations occurred due to daily rebalancing and liquidity issues, with a single day seeing a 50% increase alongside an 8% drop in the underlying asset, and premiums reaching as high as 86% before a subsequent drop of 27% the next day.
The South Korean central bank and regulatory agencies have signaled caution, and the National Assembly has initiated a review, which may further tighten regulations or push for delisting.
Source: Public Information
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Ahn Cheol-soo, as a former presidential candidate, has previously voiced concerns about South Korea's technology and financial policies. His strong stance against leverage ETFs continues his consistent vigilance regarding market speculation risks, having held similar conservative views on cryptocurrency and stock market bubbles.
In terms of capital flow, a large amount of retail investor funds has concentrated into leverage ETFs for major stocks like Samsung Electronics and SK Hynix, creating a high concentration amplification effect. Issuers attract trading volume back to the domestic market through these products, but the daily heavy rebalancing mechanism quickly amplifies interest rate and tracking error risks in a highly volatile market.
This controversy is similar to the early tightening of leverage ETF regulations in the U.S. or Japan's discussions on risk control for single stock derivatives. The South Korean stock market is currently in a transitional phase of regulatory countermeasures following the rapid expansion of leverage products.
Essentially, this represents a reversal of capital concentration driven by regulatory changes: high leverage products attract funds in the short term, increasing market concentration, but severe deviations and volatility trigger regulatory intervention, ultimately forcing capital to reallocate from high-risk instruments to more regulated assets, thereby reducing systemic risk.
ABAB News · Cognitive Law
Leverage amplifies returns while simultaneously magnifying systemic vulnerabilities.
A casino-like market will ultimately be cleared by regulation or collapse.
The higher the capital concentration, the more intense the regulatory countermeasures.