South Korea's Financial Watchdog Convenes Asset Managers on July 13, Urges Crackdown on Misleading Leveraged ETF Ads

According to Maeil Business Newspaper, South Korea's Financial Supervisory Service Chair convened CEOs of 20 asset management firms on July 13 to address risks from single-stock leveraged ETFs. In public remarks, the chair emphasized the need for immediate action against false and exaggerated advertising, stating that investors rely heavily on asset managers' promotional materials when selecting ETFs. In private discussions, concerns were raised about how single-stock leveraged ETFs may amplify market volatility and individual investor losses.

On the same day, 14 single-stock leveraged ETF products hit their lowest prices since listing as the Kospi dropped below 6,900. Market participants expressed concern that individual investors face greater losses during market downturns, though the watchdog has not yet announced concrete regulatory measures to address the issue.