South Korea’s Leveraged ETF Trading in Samsung and SK Hynix Falls After Tighter Rules

South Korea’s higher funding thresholds and tighter trading restrictions have sharply reduced leveraged trading tied to Samsung Electronics and SK Hynix, while some market participants worry the restricted funds could shift to index or overseas leveraged ETFs. According to Odaily, regulators are still watching whether the measures will curb trading activity. Eight SK Hynix-linked products saw net sales of about 1.2415 trillion won, while eight Samsung Electronics-linked products recorded net sales of 531.6 billion won. Average daily turnover for the 16 products fell from about 1.16787 trillion won from their May listing through July 30 to about 100.59 billion won after August began, a drop of more than 90%. The tightening began on July 31, when South Korean financial regulators raised the base margin requirement for single-stock leveraged ETFs from 10 million won to 30 million won. From August 19, investors must also complete simulated trading before trading the products. Regulators also plan to raise the minimum trading unit further, with an adjustment to 20 shares expected before November. Before the rules were introduced, single-stock leveraged ETFs were popular with retail investors. From May 27 to July 30, individual investors bought a net 1.52876 trillion won of the 16 products, including 993.65 billion won in SK Hynix-linked products and 535.11 billion won in Samsung Electronics-linked products.