South Korean regulator halts leveraged single-stock ETFs amid market volatility

On July 15, the Seoul Stock Exchange experienced a sudden surge, followed by a steep decline the next day, prompting the South Korean regulator to intervene. The agency suspended the launch of new leveraged ETFs that track a single Korean tech giant—either Samsung Electronics or SK Hynix—and barred retail investors from buying existing ones. These funds, introduced on May 27, promise to double the daily price change of the underlying stock, a feature that quickly drew retail capital, inflating the assets under management by a factor of 2.7 within weeks and accounting for up to 40% of ETF turnover in Seoul.

Because fund managers must rebalance their holdings each day to meet the leverage promise, their large orders moved the broader market. In response, the regulator halted further issuances and tightened access for private investors.