South Korean Brokerages Consider Raising Investment Threshold for Chip Sector Leveraged ETFs

Deep News09:01

Executives from ten leading South Korean asset management firms convened to discuss protective measures for investors in single-stock leveraged exchange-traded funds, including proposals to raise the minimum required investment and stagger the timing of portfolio adjustments.

This information comes from the Korea Financial Investment Association, which stated that a consensus was reached among participants to increase the minimum investment capital required for accessing such leveraged products. The current threshold is set at 10 million won, which is approximately $6,714.

The asset managers indicated that to mitigate market impact caused by the concentration of daily portfolio rebalancing trades at the market close, these adjustment operations need to be dispersed throughout the entire trading day.

The participating firms also proposed further strengthening the role of liquidity providers in maintaining market stability.

Citing data from the Korea Capital Market Institute, the Korea Financial Investment Association reported that since the listing of the relevant leveraged ETFs, the estimated daily stock trading volume required for rebalancing has ranged between 700 billion and 2.1 trillion won.

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