Lee Ok-yeon, the chairman of the Financial Services Commission, stated that he will swiftly prepare and announce measures regarding single-stock leverage products, which have recently been at the center of market volatility discussions. His comments come after the Blue House highlighted the need for regulatory improvements, marking the first time a financial authority head has officially confirmed the timing for such measures.
On July 16, during an appearance on the YouTube program 'Kim Eo-jun's Humble News Factory,' Lee said, "We are examining the extent to which single-stock leverage affects volatility and will soon announce supplementary measures. We are comprehensively reviewing what actions can be taken to protect investors and ensure market stability."
President Lee Jae-myung had instructed financial authorities the previous day to quickly devise supplementary measures for single-stock leverage during a joint report meeting at the Blue House.
Recently, the domestic stock market has experienced significant fluctuations, raising concerns that the single-stock leverage products, launched on May 27, may be exacerbating volatility. On July 13, the KOSPI index plummeted by more than 8% during trading, triggering the seventh circuit breaker of the year. This year alone has seen over half of the 13 total circuit breaker activations in history.
However, Lee clarified that the fundamental cause of the recent volatility lies in the semiconductor industry. He explained, "The global semiconductor industry's volatility has increased, with repeated expectations and concerns about a supercycle, causing fluctuations in semiconductor stocks worldwide. Given that Samsung Electronics and SK Hynix have a significant presence in the domestic market, the impact of foreign semiconductor stock volatility on the KOSPI has also grown."
The financial authorities have taken a cautious stance regarding proposals for temporary trading halts. Lee stated, "While there are various methods, a temporary trading halt could have greater side effects due to the nature of the market, so we are examining this comprehensively. We will reach a conclusion quickly."
He also explained the background for introducing single-stock leverage products, noting, "There was a demand to resolve regulatory asymmetry that allowed such products overseas but not domestically. The intention was to absorb domestic investors into a regulated framework for transparent management and enhanced investor protection."
Market observers expect that the upcoming meeting on July 16, involving the Ministry of Economy and Finance, the Bank of Korea, the Financial Services Commission, and the Financial Supervisory Service, will discuss measures related to single-stock leverage as a key agenda item. Kim Yong-beom, the Blue House policy chief, had previously stated on July 10, "We will closely examine the market impact of leverage products at the F4 meeting and decide on necessary regulatory improvements there."
Earlier, on July 14, the Financial Services Commission held an informal meeting with relevant agencies, including the Ministry of Economy and Finance, the Financial Supervisory Service, and the Korea Exchange, to discuss response strategies. On the same day, the Korea Financial Investment Association also convened a meeting with securities firm executives to discuss investor protection measures.
* This article has been translated by AI.
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