The size of South Korea’s single-stock leveraged ETFs has exceeded 100 trillion won, making it difficult to delist them.

Golden Finance reported that Kim Yong-beom, head of the presidential office’s policy office in South Korea, said in an interview with the KBS TV station today that, regarding a single-stock leveraged ETF that has recently sparked controversy over stock market volatility, the government will study additional and improved measures, but in reality it is difficult to take delisting measures. The current size of single-stock leveraged ETFs has already exceeded 10 trillion won, and investors are already participating in trading; if delisting were forced, “it would itself cause a huge shock to the market,” so delisting is not realistic. These products were launched only after being thoroughly discussed previously; in addition to meeting investment needs, they also have the policy goal of attracting overseas market funds back to the South Korean market, and this is not a policy mistake.

Kim Yong-beom said that these products carry structural risks and still need further optimization, especially the “deviation rate” management mechanism between the ETF and the price of the underlying asset. To maintain the target multiple, leveraged ETFs may trade intensively during periods of rapid market fluctuations, which can increase sell pressure in the short term. Regulators, asset management companies, and securities firms need further discussions on how to reduce the product’s impact on the market in specific periods, including whether adjustments should be limited to completion within 30 minutes, whether the adjustment time can be extended, and whether risk management can be achieved through other derivative instruments.