KOREAN MEDIA: KOREAN COUPONS INTEND TO TIGHTEN OR INCREASE FIVE TIMES THE MINIMUM SECURITY REQUIREMENT FOR SINGLE-STOCK LEVERAGE ETF INVESTMENT RULES

ON 15 JULY, THE KOREA HERALD REPORTED THAT THE KOREAN VOUCHER INDUSTRY HAD AGREED TO TIGHTEN THE INVESTOR PROTECTION PROVISIONS OF THE SINGLE STOCK LEVERAGE ETF. THE KOREAN FINANCIAL INVESTMENT ASSOCIATION CONVENED AN EMERGENCY MEETING OF CHIEF EXECUTIVE OFFICERS OF MAJOR ISSUERS ON TUESDAY, LOCAL TIME, TO ASSESS THE TRACKING OF TRISTAR ELECTRONICS AND THE SK HERCULES LEVERAGE ETF MARKET AND TO DISCUSS RESPONSE MEASURES. PARTICIPATING AGENCIES AGREED, IN PRINCIPLE, TO INCREASE THE MINIMUM BOND REQUIREMENT IN ORDER TO DISCOURAGE THE OVER-UTILISATION OF LEVERAGE BY DIASPORA INVESTORS. ONE OF THE OPTIONS UNDER DISCUSSION IS TO RAISE THE MINIMUM GUARANTEE THRESHOLD FROM 10 MILLION WON TO 50 MILLION WON. AGENCIES ALSO AGREED TO PROVIDE MORE TARGETED RISK ALERTS ACCORDING TO THE AGE OF THE INVESTOR AND THE PORTFOLIO, AND TO ENHANCE INVESTOR EDUCATION TO HELP INVESTORS BETTER UNDERSTAND THE STRUCTURE AND RISKS OF SUCH PRODUCTS. IN ADDITION, THE INDUSTRY HAS AGREED TO SPREAD REBALANCING AND HEDGED TRANSACTIONS MORE EVENLY OVER THE ENTIRE TIME OF THE TRANSACTION IN ORDER TO REDUCE THE MARKET SHOCKS ASSOCIATED WITH CONCENTRATED SALES BEFORE CLOSING. KIM XIAN