SEOUL, July 28 - South Korea's top financial regulator said on Tuesday it would consider placing a cap on retail investors' holdings in single-stock leveraged exchange-traded funds (ETFs) if deemed necessary, local media reported.
Lee Eog-weon, chairman of the Financial Services Commission, made the remarks during a meeting with local brokerages and asset managers in Seoul. He said the regulator would review and prepare additional measures aimed at curbing demand for these ETF products, and identified potential options including imposing a limit on the total value of such investments for each individual investor.
The comment follows a move last week by the regulator to raise the cash deposit required for retail investors who want to buy these leveraged ETFs. Those ETF products are tied mostly to two of the country's largest companies and major semiconductor manufacturers - Samsung Electronics and SK Hynix.
Market reaction was acute on Tuesday. Shares of Samsung Electronics fell as much as 9.7% in Seoul amid concerns that the memory-chip maker may cede market share to Chinese rival CXMT and over financing risks related to AI infrastructure spending. Peer SK Hynix, which recently listed its American Depositary Receipts in the U.S., slid as much as 11.2% on Tuesday in Seoul. SK Hynix's ADR dropped 10% on Nasdaq on Monday to below its IPO price.
The regulator's consideration of caps comes against this backdrop of heightened volatility for stocks linked to leveraged ETF products that are popular with retail investors. Officials signalled they remained prepared to take additional steps beyond margin changes to limit exposure if needed.
Lee's remarks were delivered directly to market participants in a forum with brokerages and asset managers, reflecting the regulator's intent to consult and communicate with industry stakeholders while weighing potential interventions.
At this stage, authorities said they would review policy options and prepare measures as appropriate, but no specific new limits were announced beyond the earlier uplift in required cash deposits.
Location: Seoul