South Korean President Lee Jae Myung has called for immediate complementary measures to address the risks posed by single-stock leveraged exchange-traded funds (ETFs), which have been linked to heightened market volatility.
The directive marks a significant escalation in the government's response to the rapid growth of these complex financial products, which allow retail investors to gain leveraged exposure to individual equities.
The president's intervention follows growing concerns from regulators and market participants about the destabilizing effect of these instruments on the broader equity market.
Single-stock leveraged ETFs have seen a surge in trading volume, with critics arguing that their mechanics can amplify price swings and create systemic risks, particularly during periods of market stress.
The products, which use derivatives to multiply the daily returns of underlying stocks, have become a focal point for debate over investor protection and market integrity.
This call for action aligns with earlier statements from Finance Minister Koo Yun-cheol, who indicated that the finance ministry is actively considering new measures to mitigate the risks associated with these funds.