Korea Strategy "New rules for single-stock leveraged ETF" Son

Research evidence excerpt

Korea Strategy "New rules for single-stock leveraged ETF" Son

Global Research

17 July 2026ab

Korea Strategy Equity Strategy

KoreaNew rules for single-stock leveraged ETF

Yong-Suk Son, CFA

Analyst

New rules on single-stock leveraged ETF announced yongsuk.son@ubs.com

+82-2-3702 8804

The gov’t has disclosed measures to curb speculative trading in single-stock leveraged

ETFs, including raising the minimum cash deposit to Won30m (5Aug) from an effective

Won3m, eliminating the use of substitute collateral for up to 70% of required deposit

(19Aug), prohibiting drawdowns of deposits during the investment period, increasing

the minimum trading unit from 1 to 20 shares (tentative, Nov) and requiring longer

investor education (3hrs vs previous 2hrs). In addition, the gov’t suspended launching of

new single stock leveraged ETF and banned marketing of the product.

Impact of the new rules

We see suspending new launches of single-stock leveraged ETFs as likely to support the

government’s objectives, alongside the Won30m all cash minimum deposit

requirement. We expect the latter could reduce retail participation as it is equivalent to

7% of household assets in the third income quintile and 27% of their financial assets.

However, we expect limited impact from increased education and higher trading units

(20 shares = cUS$190).

But market moves are already forcing leveraged ETF down

Importantly, we believe market price actions are already forcing single-stock leveraged

ETFs down – AUM (Korea and overseas listed) has fallen from Won24trn peak on 25Jun

to current Won17trn (Figures 3-5). Retail net buying of single-stock leveraged ETFs,

although still active, is slowly declining (Figures 6-7). This is as investors would have