South Korean brokerage firms discuss raising minimum deposit requirements for chip stock leveraged ETFs
The Korea Financial Investment Association said the CEOs of the country's 10 large asset management companies discussed launching investor protection measures for individual stock leveraged ETFs, including raising minimum deposit requirements and spreading rebalancing trading hours. According to a statement released by the association, participants agreed on the need to raise the minimum deposit requirement for investing in such leveraged products from the current level of 10 million won ($6,714). In order to reduce the impact of daily rebalancing transactions (which are concentrated before the close) on the market, various asset management companies stated that they need to work hard to spread rebalancing activities into various periods of the trading day. They also noted the need to strengthen the market stabilizer role of liquidity providers. Citing data from the Korea Capital Market Research Institute, the Korea Financial Investors Association said that since the launch of related leveraged ETFs, the stock trading volume required for daily rebalancing is estimated to be approximately 700 billion to 2.1 trillion won.