Financial Investment Industry Launches Voluntary Measures for Stable Single-Stock Leverage Including Intraday Rebalancing Dispersal

The Korea Financial Investment Association has developed self-regulatory measures for the financial investment industry to address recent heightened market volatility. These include dispersing the rebalancing trades of single-stock leveraged products throughout the trading session and after market close, as well as reducing the transaction volumes of liquidity providers (LPs).

According to the Korea Financial Investment Association on July 30, the association held an emergency meeting the previous day with the heads of asset management companies operating single-stock leveraged products and executives in charge of LPs at securities firms. The meeting resulted in the announcement of voluntary market stabilization and investor protection measures based on these key points.

The industry has recognized the severity of losses that individual investors have recently experienced with high-risk products. To mitigate shocks to underlying assets, the concentration of rebalancing transactions near market close will be dispersed across intraday trading and post-market hours. In addition, asset management firms will work with LPs at securities companies to reduce LP transaction volumes and closely monitor premium and discount rates. Efforts will also be made to strengthen investor risk disclosures and to support the rapid adoption of government measures such as an increase in the minimum initial deposit.

At the meeting, asset management company executives noted that single-stock leveraged products are high-risk vehicles and are not suitable for general individual investors who do not thoroughly understand their structure. They urged investors to exercise caution.

Hwang Sungyeob, Chairman of the Korea Financial Investment Association, emphasized, "We will promptly implement these voluntary actions, such as dispersing rebalancing trades and managing LP transaction volumes, and cooperate closely with the government to do our utmost to stabilize the market and protect investors."

The Korea Financial Investment Association and industry participants will review the progress of related measures, such as the early implementation of the increased minimum deposit requirement starting July 31, and will discuss additional steps if necessary.

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