FSS: "Volatile Market... Beware of Losses from Forced Selling"

As volatility in the domestic stock market increases, the Financial Supervisory Service has begun inspecting risk factors that could lead to investment losses for individual investors.

On the morning of June 17, the Financial Supervisory Service announced that it held an emergency meeting with market experts at its Yeouido headquarters in Seoul to address the recent expansion of capital market volatility. The meeting was organized to assess the current situation of heightened volatility in the domestic capital market and to discuss key risk factors and future outlook.

Hwang Seon-oh, Deputy Governor of the Financial Supervisory Service, stated, "Investors should refrain from relying on high-risk products or making excessive leveraged investments, and instead invest within their own financial capacity." He also emphasized, "The securities industry should diligently fulfill its duty to provide explanations so that individual investors can fully understand the inherent risks and make informed decisions."

During the meeting, warnings were raised that individual investors could suffer losses due to forced selling (margin calls) in a volatile market environment. As the balance of credit loans increases and market volatility grows, forced sales may occur if collateral maintenance ratios fall below required levels. In particular, the concentration of investments in specific stocks and single-stock leveraged exchange-traded funds (ETFs) was identified as a factor that could further amplify potential losses.

The Financial Supervisory Service plans to strengthen its continuous monitoring system for both domestic and overseas risk factors in response to the expansion of market volatility.

This content was produced with the assistance of AI translation services.