South Korea’s financial regulator has introduced stricter capital requirements for leveraged exchange-traded funds, aiming to dampen speculative trading that has fueled wild swings in the domestic equity market.
The new measures, unveiled on Thursday, raise the minimum deposit threshold for investors seeking exposure to these high-risk instruments, effectively raising the barrier to entry for retail traders who have driven recent volatility.
The intervention targets single-stock leveraged ETFs, which have become a focal point of market instability as investors chase gains in the semiconductor sector.
By increasing the capital needed to maintain positions, regulators hope to reduce the frequency of forced liquidations and the resulting price dislocations that have plagued Korean tech stocks in recent months.
This move follows a fivefold increase in margin requirements mandated earlier by South Korean authorities, marking a second major escalation in the regulatory crackdown.
The initial margin hike was designed to cool speculative fervor in the semiconductor sector, but persistent volatility prompted further action.