South Korean authorities are implementing stricter regulations on leveraged exchange-traded funds (ETFs), specifically targeting trading activity in the minutes leading up to market close.
The new measures aim to reduce end-of-day volatility and curb speculative trading that has surged in recent months, particularly in funds focused on the semiconductor sector.
The regulatory tightening comes as South Korea’s financial markets face structural pressure from the rapid expansion of these high-risk instruments.
Leveraged ETFs tied to individual semiconductor stocks have seen significant inflows, increasing market instability and raising concerns among policymakers about the sustainability of such speculative flows.
By restricting trades near the closing bell, regulators hope to mitigate the impact of last-minute order imbalances that can distort price discovery.
This move is part of a broader effort to rein in speculative behavior that has characterized the local equity market, where retail investors have increasingly turned to leveraged products to chase gains in the tech sector.