Korea tightened its single-stock leverage product trading rules on August 19 and new investors were required to complete at least five hours of simulation

ON AUGUST 12, KOREA ASSOCIATED PRESS REPORTED THAT ON AUGUST 12, THE KOREA FINANCE COMMISSION HAD APPROVED AMENDMENTS TO THE RELEVANT RULES, FURTHER STRENGTHENING ETF, ETN PRICE DEVIATION MANAGEMENT AS OF AUGUST 19 AND EXPANDING THE ANALOGUE TRANSACTION REQUIREMENTS TO SINGLE STOCK LEVERAGE PRODUCTS, INCLUDING REVERSE PRODUCTS, LISTED IN KOREA AND OVERSEAS. THE NEW REGULATIONS TIGHTEN PRICE DEVIATIONS FOR ALL ETFS AND ETNS BY 3 PER CENT FOR KOREAN INDIGENOUS PRODUCTS AND 6 PER CENT FOR OVERSEAS PRODUCTS, TO 2 PER CENT AND 5 PER CENT, RESPECTIVELY. THE KOREA EXCHANGE ALSO PLANS TO RESTRICT ITS NEW LIQUIDITY SUPPLY TO LIQUID PROVIDERS WHO WILFULLY, NEGLIGENTLY OR REPEATEDLY VIOLATE THEIR MANAGEMENT OBLIGATIONS. SINCE 19 AUGUST, INDIVIDUAL GENERAL INVESTORS WHO INVEST FOR THE FIRST TIME IN KOREAN OR OVERSEAS LISTED SINGLE STOCK LEVERAGE PRODUCTS HAVE HAD TO COMPLETE A FREE SIMULATION. INVESTORS ARE REQUIRED TO CARRY OUT SIMULATIONS OF AT LEAST FIVE TRADING DAYS, ONE HOUR OR MORE PER TRANSACTION, FOR A TOTAL OF NOT LESS THAN FIVE HOURS, TO EXPERIENCE THE NEGATIVE COMPOUNDING EFFECTS OF THE LEVERAGED PRODUCT AND THE ACTUAL TRADING ENVIRONMENT. ACCORDING TO THE KOREA FINANCE COMMISSION, THE BASIC SECURITY FOR SINGLE-STOCK LEVERAGED PRODUCTS HAD PREVIOUSLY BEEN RAISED TO 30 MILLION WON ON 31 JULY, AND THE VALUE OF TRANSACTIONS FOR RELATED PRODUCTS HAD FALLEN TO LESS THAN ONE-HUNDREDTH OF THE PREVIOUS DAY. ACCORDING TO THE REGULATOR, ALTHOUGH THERE HAS BEEN SOME RECENT REDUCTION IN STOCK MARKET VOLATILITY, INSTABILITY REMAINS AND MARKET MONITORING AND FOLLOW-UP WILL CONTINUE。