The South Korean Financial Authorities are planning to introduce an "Emergency Measure Power," where the leverage multiple of a single stock leveraged ETF can be reduced to 1.5 times. They will also simultaneously proceed with investment limits and simulated trading obligations.
BlockBeats News, August 2nd, the South Korean Financial Services Commission is jointly promoting an amendment to the Capital Market Act with the Financial Supervisory Service. The key measure is to introduce the "emergency measure power," which allows the financial authorities to temporarily adjust the leverage ETF's tracking multiple from the current 2 times to 1.5 times or 1 time during significant financial market volatility, without the need for a beneficiary meeting vote. Under the current law, changes in leverage multiples are considered a core term directly linked to investor returns, requiring approval by more than half of the attendees at the beneficiary meeting and over one-fourth of the total beneficial securities outstanding, making it difficult to respond quickly to sudden market changes. The amendment will draw on guidelines issued by the Hong Kong Securities and Futures Commission on July 24th, which allow asset management companies to adjust leverage and inverse product multiples based on operational capabilities, with preset standards and public disclosure, and set a maximum duration for the measures, with multiples only allowed to be decreased.
At the same time, the South Korean authorities are concurrently considering setting a leverage investment limit (only around 20% of the total investment amount can be used for leverage products) and introducing mandatory simulated trading, the latter aimed at preemptive risk control for large-volume traders. As of July 31st, the base margin has been increased from 10 million Korean Won to 30 million Korean Won, with the authorities stating that there is further room for upward adjustment based on market conditions.
The South Korean Financial Services Commission Chairman stated at the National Assembly's Government Administration Committee meeting on July 29 that "reducing the multiple is expected to be effective in easing volatility, but how to balance the beneficiary meeting and investor interests will be carefully considered during the amendment process." This indicates that South Korea's regulatory framework for leverage ETFs is transitioning from a "post hoc patch" to a dual-layer structure of "prevention + emergency intervention."
