[2026 Parliamentary Audit] Leveraged ETF Review Criticized as "Irregular and Rushed"... Lee Chanjin: "To Meet the Schedule"

Financial Supervisory Service audit by the National Assembly’s Political Affairs Committee on Oct. 19
On stock market volatility: “Leveraged ETFs were a contributing factor to some extent”

Controversy over the Financial Supervisory Service’s “irregular” and “rushed” review process for the launch of single-stock leveraged exchange-traded funds (ETFs) came under scrutiny. Financial Supervisory Service Governor Lee Chanjin, who previously sparked controversy by saying the launch “should have been stopped, even if we had to lie down in front of it,” acknowledged that the review had been expedited in part to meet the listing schedule. He also said that single-stock leveraged ETFs had “contributed to some extent” to recent volatility in the domestic stock market.

Lee Chanjin, governor of the Financial Supervisory Service, delivers opening remarks during a parliamentary audit of the Financial Supervisory Service and other agencies at the National Assembly on Oct. 19, 2026. Photo by Yoon Dongju

At a parliamentary audit of the Financial Supervisory Service by the National Assembly’s Political Affairs Committee on Oct. 19, Lee responded to a question from People Power Party lawmaker Park Daechul, saying, “Around mid-April, the Financial Services Commission announced a policy schedule for listing single-stock leveraged ETFs,” adding, “We expedited the review in part to meet that schedule.”

The review period was unusually short. According to Park, it takes an average of 62 days to list a standard ETF and 43 days even for an ETF tracking a major index, but the single-stock leveraged products completed the listing process in just 29 days. Noting that the Financial Services Commission had announced the listing date before asset managers applied for listings, Park criticized the process as “irregular and rushed.”

The listing review process also appears to have differed from standard practice. Park asked, “There are usually two stages in a listing review. The Korea Exchange conducts a preliminary review, followed by a review by the Financial Supervisory Service. Is this the first time a review has been conducted before the preliminary review was completed?” He was referring to the fact that the Financial Supervisory Service had seen materials on the preliminary review results while the Korea Exchange’s preliminary review was still underway. Lee replied, “I checked, and I understand there were no particular problems.”

At the audit, critics also accused the Financial Supervisory Service of failing to intervene despite having identified the product’s risks in an internal report. People Power Party lawmaker Choi Eunseok presented the report, which pointed to structural flaws in single-stock leveraged ETFs and warned that their introduction in Korea required caution, and asked Lee whether he had read it. Lee replied, “I have not seen it.”

Choi also noted that Hwang Seono, a vice governor of the Financial Supervisory Service, had attended a meeting in January of this year chaired by Kim Yongbeom, then policy chief at the presidential office. Choi said, “The meeting concluded that the launch of single-stock leveraged ETFs should go ahead. Did you express opposition at the time?” Hwang avoided giving a direct answer, saying, “I don’t remember clearly.”

Single-stock leveraged ETFs, commonly known as Samsung-Nix leveraged ETFs, were launched on May 27 of this year. At the time, some opposition figures and others repeatedly questioned whether the products had been rushed to market to boost the stock market just one week before the June 3 local elections.

Financial Supervisory Service Governor Lee Chanjin moves to his seat after handing the oath document to Yoo Dongsoo, chair of the National Assembly’s Political Affairs Committee, following his witness oath at a parliamentary audit of the Financial Supervisory Service and other agencies at the National Assembly on Oct. 19, 2026. Photo by Yoon Dongju

At the audit, in response to People Power Party lawmaker Kim Jaeseop’s criticism, “Do you have no regrets or desire to apologize to the public?” Lee bowed his head and said, “I am deeply sorry.” He added, “When I said in June that the launch ‘should have been stopped, even if we had to lie down in front of it,’ I did so because I expected investors to suffer significant losses and wanted to send a message to sound the alarm for them.”

Asked whether he thought the launch of single-stock leveraged ETFs had contributed to the recent extreme stock market volatility, Lee said, “I think it was a contributing factor to some extent,” adding, “The severe volatility in the underlying shares of Samsung Electronics and SK hynix had a fundamental impact.” He also said he was “deeply concerned” about the recent sharp market decline.

Asked whether it had been appropriate for the National Pension Service to defer its rebalancing, Lee drew a line, saying, “It would not be appropriate for me to comment as the head of an agency.” Lee previously served as a member of the National Pension Service Fund Management Committee. Regarding conflict-of-interest concerns involving his son, who works at Mirae Asset Global Investments, Lee rejected the allegations, saying, “Under the enforcement rules, my son is neither a person with a private interest in the matter nor someone with any connection to my duties.” He added, “I recused myself to avoid any misunderstanding, as there could be many issues related to sanctions.”

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