Financial authorities in South Korea have announced an accelerated timeline for tightening regulations on single-stock leveraged products, moving the implementation date forward to July 31. The move aims to curb aggressive speculative buying in high-volatility products linked to major technology firms, including Samsung Electronics and SK Hynix.
Key Regulatory Changes
Cash Deposit Requirement Raised: Individual investors must now hold a minimum basic deposit of ₩30 million (~$21,700 USD) in pure cash to open new positions or add to existing ones in single-stock leveraged Exchange Traded Funds (ETFs) and Exchange Traded Notes (ETNs).
Discontinuation of Collateral Recognition: Previously, investors could satisfy deposit requirements using substitute securities (stocks, ETFs, bonds) valued at up to 70% of market value. Under the updated policy, non-cash securities are fully excluded.
T+2 Settlement Enforcement: Proceeds from selling other stocks or securities will no longer count toward the deposit on the transaction date (T). Investors must wait until full settlement clears on T+2 to utilize those funds.
Elimination of Tier Reductions: Brokerages will no longer be permitted to lower deposit thresholds for experienced traders after 3 months, making the ₩30 million cash floor permanent.
Policy Acceleration & Background
The Financial Services Commission (FSC) initially scheduled these measures to take effect sequentially in mid-August to allow brokerage systems time to adjust. However, implementation was fast-tracked following explicit directives from President Lee Jae-myung during a Cabinet meeting on July 21, where he called for immediate and decisive action to address market volatility.
"Regulators must act swiftly and decisively to stabilize demand and protect retail investors from excessive leverage risks," President Lee stated during the briefing.
Brokerages that fail to update their compliance systems by July 31 will be restricted from offering new single-stock leveraged products.
Future Steps & Market Outlook
The FSC plans to roll out additional measures in the coming weeks:
Disparity Ratio Controls: Rules governing tracking error and price disparity will take effect on August 19 via updated Korea Exchange (KRX) operating codes.
Increased Trading Unit Sizes: Authorities are actively negotiating to expedite raising the minimum trading lot size for single-stock leveraged products to 20 shares ahead of the original November target.
Financial regulators emphasized that they will continuously monitor market stability following implementation and stand ready to introduce further corrective measures if speculative overheating persists.
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