Korean chip stock leveraged ETFs amplify volatility, and securities firms discuss raising the investment threshold

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As concerns about investor losses and market volatility triggered by leveraged exchange-traded funds (ETFs) linked to Samsung Electronics and SK hynix intensify, Korea’s securities industry is considering a series of investor protection measures, including raising the minimum deposit requirement. Reportedly, on July 14, the Korea Financial Investment Association and the CEOs of ten leading securities firms held an emergency meeting in Seoul to specifically discuss the status of individual-stock leveraged ETFs and investor protection measures. The participating institutions said that while individual-stock leveraged ETFs offer investors more choices and enrich product diversity, their “leverage effect” amplifies losses—even for relatively small investment amounts—leading to rapid losses and even losses during sideways, range-bound market conditions. To prevent excessive leverage, attendees agreed to consider raising the minimum deposit requirement for investing in such leveraged products from the current 10 million won ($6,714) level. (China Securities Journal)
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