Korea's proposed introduction of “emergency privileges” limits the single leverage to a factor of 1.5

ON 3 AUGUST, THE KOREA FINANCIAL REGULATORY AUTHORITY WAS PROMOTING THE INTRODUCTION OF AN “URGENT ACTION MANDATE” TO ALLOW REGULATORS TO REDUCE THE LEVERAGE MULTIPLES OF SINGLE-EQUITY LEVERAGE PRODUCTS QUICKLY IN EMERGENCY SITUATIONS. PREVIOUSLY, SUCH PRODUCTS WERE CONSIDERED TO BE ONE OF THE MAIN FACTORS LEADING TO HIGH MARKET VOLATILITY. REGULATORY AUTHORITIES ARE ALSO LOOKING AT OTHER RESTRICTIONS, INCLUDING SETTING A CEILING ON THE LEVEL OF LEVERAGE INVESTMENT AND FURTHER RAISING THE REQUIREMENT FOR A BASIC GUARANTEE. THE KOREA FINANCE COMMISSION (FSC) WILL WORK WITH THE FINANCIAL SUPERVISORY AUTHORITY (FSS) TO DRAFT AMENDMENTS TO THE FINANCIAL INVESTMENT INDUSTRY AND CAPITAL MARKETS ACT TO ESTABLISH A LEGAL BASIS FOR MARKET STABILIZATION MEASURES IN EMERGENCY SITUATIONS, AS REPORTED BY THE KOREAN FEDERATION. THE CORE ELEMENT OF THIS ADJUSTMENT IS TO ALLOW THE FINANCIAL REGULATORY SECTOR TO TEMPORARILY ADJUST THE LEVERAGE OF THE SINGLE-EQUITY ETF. CURRENTLY, THE SINGLE-EQUITY LEVERAGE PRODUCT IN THE REPUBLIC OF KOREA IS DESIGNED TO TRACK TWICE THE PROCEEDS. BY AUTHORIZING URGENT ACTION, IF IT WAS DEEMED NECESSARY TO PROTECT INVESTORS, THE LEVERAGE MULTIPLIER WOULD BE REDUCED TO 1.5 OR 1 TIMES. KIM XIAN