South Korea Plans Emergency Power to Cut Leverage ETF Multiples to 1.5x

Regulators propose emergency authority to reduce leverage ETF multiples to 1.5x or 1x during volatility, bypassing beneficiary votes. Concurrent measures include investment caps and mandatory simulated trading.

Woofun AI reports that the South Korean Financial Services Commission and Financial Supervisory Service are amending the Capital Market Act to introduce "emergency measure power." This allows authorities to temporarily lower leverage ETF tracking multiples from 2x to 1.5x or 1x during significant market volatility without beneficiary approval. The amendment references Hong Kong guidelines, permitting multiple reductions with preset standards and public disclosure.

Authorities are also considering a leverage investment limit, restricting leverage products to approximately 20% of total investment amounts, and introducing mandatory simulated trading for large-volume traders. As of July 31st, the base margin was raised from 10 million to 30 million Korean Won, with potential for further increases. The FSC Chairman noted on July 29 that reducing multiples may ease volatility, signaling a shift toward a "prevention + emergency intervention" regulatory framework.