On Criticism of "Insufficient Stress Testing"... Lee Eog-weon Says, "We Assessed the Risks of Leveraged ETFs" [2026 National Assembly Audit]

FSC Chairman Lee Eog-weon rebutted criticism that the Financial Services Commission had not conducted stress tests before introducing single-stock leveraged exchange-traded funds (ETFs), saying it had assessed investor risks and market impacts.

Yonhap News Agency

Rep. Park Sung-hoon of the People Power Party said on Thursday, the 8th, during the National Assembly’s audit of the Financial Services Commission by the Political Affairs Committee, “When the Lee Jae-myung administration was hastily pushing ahead with single-stock leveraged ETFs, the International Monetary Fund (IMF) warned that mechanical rebalancing hedge trades could increase market volatility. The listing review takes an average of 62 days, but single-stock leveraged ETFs took an average of 29 days to review. They were pushed through without investor safeguards or stress tests.”

In response, Chairman Lee said, “Index ETFs have a simpler structure, so the time required to list them differs, and I understand that various analyses have been conducted on single-stock leveraged ETFs, including claims that the rebalancing effect is not significant. When introducing single-stock leveraged ETFs, we put in place various investor protection measures, including requiring investors to complete preliminary education and make initial deposits, and prohibiting margin lending.”

When Rep. Seo Il-jun of the People Power Party asked whether stress tests had been conducted before single-stock leveraged ETFs were introduced, Chairman Lee avoided giving a direct answer, saying, “It depends on how you define the term ‘stress test.’” He added, “When we introduced them, we looked at investor risks and market impacts.”

During that day’s audit, Chairman Lee repeatedly responded that single-stock leveraged ETFs had been introduced “through an amendment to the Financial Services Commission’s enforcement decree” when asked who had made the decision to introduce them. Rep. Seo remarked, “President Lee Jae-myung said, ‘Someone must have made the decision.’ The question is whether this situation arose because the FSC chairman made a wrong policy decision, or whether someone else was involved. Watching you bear this heavy burden alone, I feel sorry for you.”

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