[Exclusive] Leveraged Products, the ‘Tail Wagging the Dog’... FSS Governor Says “No Clear Solution” (2026.07.14.)
![[Exclusive] Leveraged Products, the ‘Tail Wagging the Dog’... FSS Governor Says “No Clear Solution” (2026.07.14.)](/uploads/editor/2026/07/9ea2bf8ec9904a3fa8d6816483eda7de-1784181725121.jpg)
(From the moment these products were launched,
the Pension Future Forum,
more than anyone, pointed out and stressed
the problems that were bound to arise.
For the policy authorities to now claim
that there is no clear solution
seems utterly irresponsible!
We urge them to devise countermeasures without delay!)
"Given the structural problems involved, I do not think a clear answer will emerge.”
On July 13, Financial Supervisory Service (FSS) Governor Lee Chan-jin spoke of the difficulty of devising countermeasures for single-stock leveraged products, which have been blamed for driving the recent extreme volatility in the stock market.
At a meeting with the heads of 20 asset management companies held that day at the Korea Financial Investment Association, Governor Lee said, “The government authorities will probably settle on a position regarding leveraged ETFs and announce it before long,” adding, “At the current stage, this is not a matter that can be resolved in one stroke; it seems to be an area we will have to keep monitoring, revising, and supplementing.” In effect, he laid bare the frustrating reality that even the financial authorities cannot easily produce a clear alternative.
Governor Lee did not explain the ‘structural problems’ in any detail. His remarks are read as pointing out that the delisting floated in some quarters is not feasible—liquidation and the like are impossible now that individual investors have already net-purchased nearly 10 trillion won worth—and that, with the presidential office, the Financial Services Commission (FSC), and the Korea Exchange having all taken part in introducing the products, even amending the enforcement decree to do so, delisting could undermine legal trust.
Governor Lee added, “This does not seem to be an area where any one person can make the call and decide which way to go, and the authorities (the FSC) will likely be wrestling with it as well,” and said, “We will do our best as far as we can; since we (the FSS) are mostly in the position of taking the flak, we will bear the criticism in earnest, and if asset managers speak frankly about the substantive issues and their requests on the regulatory front, that will serve as an important reference in making policy decisions.”
In his opening remarks at the meeting and in his exchange with reporters afterward, Governor Lee kept silent on single-stock leveraged products. In the closed-door meeting, however, he spoke as quoted above.
