South Korea Raises Leveraged ETF Margin Requirement, Single Stock Leveraged Product Trading Volume Drops to One-Tenth of Peak

BlockBeats News, August 3rd. After South Korea increased the single-stock leverage ETF investors' margin requirements, the trading activity of related products has significantly decreased, with the trading volume dropping to approximately one-tenth of the previous peak level.

According to data from the Korea Exchange, the total trading volume of 16 single-stock leverage and inverse ETFs related to Samsung Electronics and SK Hynix in the Korean KOSPI market was 1.2388 trillion Korean won in the two trading days after the new measure was implemented, a 58.6% decrease from the 2.9907 trillion Korean won on the day the measure was implemented on July 31st.

Prior to this, the South Korean regulatory authorities raised the minimum cash collateral requirement for single-stock leverage ETF investors from 10 million Korean won to 30 million Korean won. Compared to the trading volume of 1.2485 trillion Korean won on the last trading day before the measure was implemented (July 30th), the current trading volume of related products has decreased to approximately one-tenth.

The cooling of retail investors' enthusiasm is particularly evident. Data shows that the trading volume of retail investors in single-stock leverage and inverse products has dropped to 250.7 billion Korean won, less than a quarter of the 929.9 billion Korean won on July 31st.

Analysts state that after raising the margin threshold, the effect of restricting speculative capital inflows has begun to show, and the trading pattern of retail investors continuously buying leverage products during a decline in the underlying stocks is changing.