South Korea may add measures for volatile leveraged stock products

Kim Yong-beom, Senior Presidential Secretary for Economic Affairs, stated on Sunday that the government is prepared to consider further measures if necessary to address concerns surrounding single-stock leveraged products. These products have been criticized for causing extreme stock market volatility.

Kim made these remarks during an interview on CBS Radio's "Park Sung-tae's News Show." He explained that the government plans to implement changes starting August 31, including raising the minimum deposit requirement for single-stock leveraged products from 10 million won to 30 million won. Additionally, the minimum trading unit, currently set at one lot, is planned to be increased to 20 lots, with this change being moved up from its originally scheduled implementation in November.

"We expect demand to stabilize after the implementation of these system improvement measures," Kim said. "We will monitor the effects and consider additional measures if needed." The government's actions are a response to the heightened risks associated with highly leveraged financial instruments, particularly in a market sensitive to rapid price swings.

The move aims to curb speculative trading and protect retail investors from significant losses that can arise from sudden market downturns when using leveraged products. The government's proactive stance suggests a commitment to maintaining financial market stability and investor confidence.

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We will monitor the effects and consider additional measures if needed.