The process for launching single-stock leveraged exchange-traded funds (ETFs) and the review procedures by financial authorities were scrutinized during a National Assembly audit. The Financial Supervisory Service (FSS) stated that it had not received any concerns or objections from the financial investment industry, amid ongoing inquiries regarding the pre-review of the product's structural risks and the shortened review period.
During the audit on October 19, Representative Park Dae-chul of the ruling People Power Party pointed out that the review period for single-stock leveraged ETFs was shorter than that for existing products. He noted that the average listing period for general ETFs is 62 days, while the comparable product group averages 43 days, compared to just 29 days for single-stock leveraged ETFs. He specifically questioned why the FSS conducted its review of the securities registration statement concurrently with the Korea Exchange's preliminary listing review.
In response, the FSS explained that the preliminary listing review by the exchange and the review of the securities registration statement are separate processes.
FSS Chairman Lee Chan-jin mentioned that the Financial Services Commission (FSC) had announced the product listing schedule as a policy decision, stating, "There was a need to expedite the review to meet that schedule."
The FSC had projected that single-stock leveraged ETFs could be listed as early as May 22 following the approval of a related amendment at a Cabinet meeting on April 21. Subsequently, on May 15, the anticipated listing date was pushed to May 27.
The audit also addressed how thoroughly the structural risks of the product were examined beforehand. Representative Choi Eun-seok of the People Power Party pointed out that a research report commissioned by the FSS contained warnings about the structural risks of single-stock leveraged ETFs and advised caution regarding their introduction in South Korea. Choi stated that he only received the report on October 3 and demanded the disclosure of the discussions between the FSC and the FSS regarding the matter. When asked if he had read the 150-page report, the chairman admitted, "I have not actually seen it."
In this context, the FSS confirmed that it had not officially received any concerns or objections from the industry prior to the launch of single-stock leveraged ETFs. According to written responses submitted by the FSS to Representative Park Jun-tae, the agency stated that since January 30 of this year, it had not collected or received any concerns, objections, or issues regarding the product launch from the Korea Financial Investment Association, the Korea Exchange, securities firms, asset management companies, or research institutions.
The FSS added, "Since January 30, 2026, there have been no concerns, objections, or issues raised regarding the launch of single-stock leveraged products from the Korea Financial Investment Association, the Korea Exchange, securities firms, asset management companies, or research institutions."
Furthermore, during the notice period for the amendment of the financial investment business regulations, the FSS stated that it did not receive any separate opinions from securities firms, asset management companies, or index providers, nor did it hold any separate meetings or discussions with the industry regarding the product introduction during the relevant data request period.
Following the launch of single-stock leveraged ETFs on May 27, concerns about market volatility and investor protection arose, prompting the financial authorities to temporarily suspend new listings on July 16 and prohibit advertising and promotional marketing for existing products. The FSS also noted that it is collecting data from securities firms regarding individual investors' actual trading profits and losses, but verification has been delayed due to errors found in some data.
* This article has been translated by AI.
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