![\"Clipart](\"https:\/\/www.europesays.com\/korea\/wp-content\/uploads\/2026\/08\/news-p.v1.20260730.b980fd50187c47ea81ddf567f9a02bfd_P1.jpg\"\/ "\\"Korea")
Clipart Korea<\/p>\nClipart Korea<\/p>\n
The government has begun introducing emergency powers that would allow flexible adjustment of the leverage ratio on single-stock leveraged exchange-traded funds (ETFs) during periods of market turbulence. Financial authorities are pushing to revise the Capital Markets Act so that they can respond swiftly without being constrained by procedures such as beneficiary meetings when market stability and investor protection are needed.<\/p>\n
According to the financial investment industry on the 2nd, the Financial Services Commission (FSC) is preparing an amendment to the Capital Markets Act together with the Financial Supervisory Service (FSS) to enable rapid market stabilization measures in urgent situations. A key element under discussion is establishing a legal basis to temporarily lower the ratio of single-stock leveraged ETFs, which amplify market volatility, below the current 2x level.<\/p>\n
There are already overseas cases of lowering leverage ratios during periods of market turbulence. U.S. ETF manager Direxion lowered the investment objective of some leveraged ETFs from \u00b1300% to \u00b1200% in March 2020, when financial market volatility surged amid the spread of COVID-19 and a plunge in international oil prices. The move covered 10 leveraged and inverse ETFs tracking indexes related to Brazil, Russia, energy, and gold mining.<\/p>\n
Unlike the government’s approach of granting authority to adjust ratios, this was a case in which the manager changed its investment objective at its own discretion. At the time, as the derivatives market tightened, counterparties found it difficult to supply swaps of sufficient scale, and trading costs also rose sharply. The company explained that it was “a decision to protect investors’ interests while achieving investment objectives in an unprecedented volatility environment.”<\/p>\n
The government’s system design is referencing recent guidelines from Hong Kong’s Securities and Futures Commission (SFC). On the 24th of last month, the SFC permitted adjustments to the ratios of listed leveraged and inverse products, on the premise of asset managers’ management capabilities and through processes such as setting prior criteria and disclosure.<\/p>\n
FSC Chairman Lee Eok-won said at a full meeting of the National Assembly’s National Policy Committee on the 29th of last month, “Lowering the current 2x ratio would likely have an effect in terms of easing volatility,” while adding, “How to consider beneficiary meetings and the investor aspect is something we will examine during the legislative process.”<\/p>\n
The government reportedly plans to specify the scope and requirements for exercising emergency powers by including in the amendment measures such as setting an upper limit on the duration of emergency actions and a lower limit on the adjustable ratio. Authorities had initially taken a cautious stance, on the grounds that adjusting ratios did not align with the products’ purpose. However, prompted by Hong Kong’s introduction of such a system and the recent expansion of stock market volatility, they have shifted toward establishing a legal basis to allow ratio adjustments in emergency situations.<\/p>\n","protected":false},"excerpt":{"rendered":"Clipart Korea The government has begun introducing emergency powers that would allow flexible adjustment of the leverage ratio…\n","protected":false},"author":2,"featured_media":107120,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[19977,39361,1037,55273,55272,7586,3536,112,6751],"class_list":["post-107119","post","type-post","status-publish","format-standard","has-post-thumbnail","category-seoul","tag-capital-markets-act","tag-direxion","tag-financial-services-commission","tag-hong-kong-sfc","tag-leverage-ratio","tag-leveraged-etf","tag-market-volatility","tag-seoul","tag-single-stock-etf"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/107119","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/comments?post=107119"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/107119\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media\/107120"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media?parent=107119"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/categories?post=107119"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/tags?post=107119"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}