'The buck stops here!'
This phrase, though somewhat tarnished by the actions of a former president who plunged the country into chaos with an unexpected declaration of martial law, encapsulates the essence of public service. It is rare for anyone to take full responsibility for their actions, especially when faced with criticism. It is human nature to avoid blame.
This is particularly true for public officials who formulate and implement significant policies. Acknowledging a policy's failure or error and accepting responsibility is a challenging task, as it often directly correlates with job security. Nevertheless, the underlying truth of this phrase is that a good public servant should be willing to take responsibility.
The controversy surrounding single-stock leverage ETFs has been escalating for three weeks. The spark for this debate was ignited by comments made by Lee Chan-jin, the Director of the Financial Supervisory Service, on June 22. He expressed regret, stating, "I should have done everything possible to prevent the product's launch. I regret that I did not." He also remarked, "This only benefits the securities firms." His comments suggested that single-stock leverage ETFs are a 'monstrous product' that should never have been introduced. Following his remarks, single-stock leverage ETFs became labeled as a 'public enemy' and were blamed for turning the KOSPI into a 'gambling den.'
His statements are not without merit. A product that can fluctuate by as much as 60% in a single day is unprecedented in our stock market. It resembles a 'meme coin,' enticing investors with the allure of both massive gains and significant losses. This is why over 10 trillion won has suddenly flowed into this product. Additionally, since its introduction, market volatility has increased. However, whether this is a clear causal relationship or mere coincidence requires thorough analysis.
Notably, Lee's comments have sparked another controversy regarding accountability. When he stated, "I should have prevented the product's launch," attention shifted to who he believed should have been responsible for that prevention. A former financial official pointed out that his remarks implied he bore no responsibility and that the product's launch was driven by someone else.
In fact, the market has begun to question, 'Who is responsible?' The opposition party has been consistently targeting the government with calls for accountability. The Blue House's policy chief has also been drawn into the debate over responsibility. Tensions have arisen among the Financial Services Commission, the Financial Supervisory Service, the Korea Exchange, the Korea Financial Investment Association, and the securities industry, as each entity tries to deflect blame from their organization.
On July 15, President Lee Jae-myung weighed in on the issue. During a meeting with Lee Chan-jin at a Financial Services Commission briefing, he remarked, "It seems you have been facing a lot of challenges lately due to the Samsung and Hynix ETFs..." Lee Chan-jin responded, "As the market manager, I accept my responsibility." The president then instructed him to swiftly prepare supplementary measures, focusing on problem-solving rather than assigning blame.
As a result of the president's directive, the debate over responsibility for the launch of single-stock leverage products has subsided for now. The focus has shifted to what supplementary measures will be implemented. The government is expected to announce follow-up measures regarding single-stock leverage ETFs soon. Given the president's mention of 'supplementary' measures, it seems likely that the response will involve mechanisms to prevent excessive betting by individual investors rather than a complete withdrawal of the product.
However, the effectiveness of these supplementary measures and their potential to reduce market volatility remain to be seen. Investors have already become accustomed to chasing high returns rather than fearing losses. If restrictions are placed on domestic single-stock leverage products, many may turn their attention back to overseas options, which could once again impact exchange rates. It is well-known that the initial purpose of introducing single-stock leverage was to stabilize exchange rates.
There are further concerns. If market volatility continues even after the announcement of supplementary measures, the question of accountability will resurface. At that point, who will take responsibility? Will we hear again, "I should have done everything possible to prevent it?"
* This article has been translated by AI.
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