The scale of single-stock leveraged ETFs in South Korea has exceeded 10 trillion won, making it difficult to implement delisting measures.

According to Odaily, Kim Yong-beom, Director of the Policy Office at the South Korean Presidential Office, stated today that regarding the controversy caused by single-stock leveraged ETFs recently affecting the stock market, the government will consider additional improvement measures, but in reality, it is difficult to implement delisting measures. Currently, the size of single-stock leveraged ETFs has exceeded 10 trillion Korean won, and investors have already participated in trading. Forcibly delisting such products "would itself cause a massive shock to the market," making delisting unrealistic. Kim noted that these products were launched after thorough discussion, and apart from meeting investment demand, they also serve a policy goal of attracting capital that might otherwise flow to overseas markets back to Korea, and are not a policy error.

Kim Yong-beom pointed out that these products carry structural risks and still require further optimization, especially regarding the management mechanism of “tracking error” between the ETF and the price of the underlying asset. Leveraged ETFs, in order to maintain their target multiples, may engage in concentrated trading during periods of rapid market volatility, which could lead to intensified selling pressure in a short time. Regulators, asset management firms, and securities companies need to discuss further ways to reduce the product's market impact at certain times, including whether adjustments should be completed within 30 minutes, whether adjustment times can be extended, and whether other derivative methods can be used for risk management, among other options.