South Korea's financial supervisory authority is promoting the introduction of an “emergency action authority” to allow regulators to quickly reduce the leverage ratio of single-share leveraged products in emergency situations. Previously, this type of product was considered to be one of the main factors causing sharp market fluctuations. The regulatory authorities are also studying other restrictions, including setting limits on leveraged investment amounts and further increasing basic margin requirements. According to Yonhap News Agency, the Financial Services Commission of Korea will jointly draft an amendment to the Financial Investment Industry and Capital Market Law with the Financial Supervisory Service to establish a legal basis for adopting market stabilization measures in case of emergency. The core content of this adjustment is to allow the financial supervisory authorities to temporarily adjust the leverage ratio of single-share leveraged ETFs. Currently, single-share leveraged products in Korea are aimed at tracking 2x returns. Through the Emergency Action Authorization, the leverage ratio will be reduced to 1.5 or 1 times if it is deemed necessary to protect investors.

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