Svmuu News: The Korea Financial Investment Association stated that the CEOs of the country’s 10 major asset management companies discussed investor protection measures for leveraged ETFs tracking individual stocks, including raising the minimum deposit requirement and spreading out rebalancing transactions over time. According to a statement released by the association, participants agreed that it is necessary to raise the minimum deposit requirement for investing in such leveraged products from the current level of 10 million won ($6,714).
To mitigate the impact of daily rebalancing trades—which are concentrated before the market close—on the market, the asset management companies indicated that efforts are needed to spread rebalancing activities across different time periods during the trading day. They also noted the need to strengthen the role of liquidity providers as market stabilizers.
Citing data from the Korea Capital Market Institute, the Korea Financial Investors Association stated that since the launch of these leveraged ETFs, the estimated daily stock trading volume required for rebalancing has ranged from 700 billion to 2.1 trillion won. (Sina Finance)