Small shareholders in South Korea demanded the introduction of 30-minute call auction trading for single-stock leveraged exchange-traded funds (ETFs) on the 13th, as these products face mounting pressure for delisting amid accusations of fueling market volatility. The ACT platform, representing small shareholders, announced that 95.2% (1,999 out of 2,099) of surveyed members supported the measure as an alternative to forced delisting, which they argued could shock the underlying stock supply during the liquidation of approximately 15 trillion won in assets. The proposal comes as politicians including Jang Dong-hyuk and Ahn Cheol-soo criticized leveraged ETFs for turning the KOSPI into a "casino" and called for product delisting and intensive audits of instruction lines, while Deputy Prime Minister and Minister of Economy and Finance Koo Yun-chul stated authorities are monitoring the situation and discussing stabilization measures.
ACT Platform Survey Shows 95.2% Support for Call Auction Trading
According to the financial investment industry on the 13th, the ACT platform conducted an emergency survey of 2,099 shareholder members, with 95.2% (1,999 respondents) supporting the introduction of 30-minute call auction trading for single-stock leveraged ETFs. Small shareholders argued that the forced delisting option raised by some market participants could impact the supply of underlying stocks during the liquidation process of approximately 15 trillion won in assets. They proposed converting single-stock leveraged products to 30-minute call auction trading to control ultra-short-term chase buying and overheating.
The Korea Exchange operates a "short-term overheated stock" designation system to prevent speculative concentration. When designated as a short-term overheated stock, 30-minute call auction trading is applied for three trading days, forcibly slowing the trading pace. ACT proposed applying this market stabilization mechanism to leveraged ETFs to structurally control ultra-short-term trading.
Politicians and Regulators Intensify Pressure on Leveraged ETF Products
Controversy surrounding single-stock leveraged ETFs has spread to the political sphere, facing pressure from all directions. Political figures including Jang Dong-hyuk and Ahn Cheol-soo criticized that funds flowing into these products have turned the KOSPI into a "casino" and called for product delisting and intensive audits of instruction lines.
Deputy Prime Minister and Minister of Economy and Finance Koo Yun-chul stated at a recent parliamentary briefing regarding concerns over volatility expansion of single-stock leveraged ETFs, "We are well aware and closely monitoring with related agencies," adding "We are discussing stabilization measures on how to supplement and minimize" the issues.
Industry Analysts Challenge Volatility Impact Claims
Within the financial investment industry, some analysis suggests that claims of leveraged ETFs amplifying market volatility are somewhat exaggerated. While daily trading volume reaches tens of trillions of won and appears to create impact, the actual rebalancing volume that directly affects stock prices is only 4-6% of the underlying stock trading volume, indicating that supply impact has been inflated by optical illusion effects.
Financial Services Commission Requests Voluntary Measures from Securities Firms
As market debate between delisting and maintaining supplementary measures remains heated, regulatory action is accelerating. The Financial Services Commission requested all securities firms to submit voluntary action plans for investor protection by the 13th. Currently, authorities are discussing raising the basic deposit for leveraged ETFs from the current 10 million won to 30-50 million won.
ACT plans to deliver an official letter containing the shareholder survey results to the Presidential Office and financial authorities on the afternoon of the 13th, urging immediate introduction of 30-minute call auction trading.
FAQ
What did the ACT platform survey reveal on the 13th?
The ACT platform announced that in an emergency survey of 2,099 small shareholder members, 95.2% (1,999 respondents) supported the introduction of 30-minute call auction trading for single-stock leveraged ETFs as an alternative to forced delisting.
What regulatory measures is the Financial Services Commission considering?
The Financial Services Commission requested all securities firms to submit voluntary investor protection action plans by the 13th. Authorities are discussing raising the basic deposit requirement for leveraged ETFs from the current 10 million won to 30-50 million won.
