Lee Chanjin: "Single-Stock ETF Review Was Expedited... Naming Key Figures Behind Their Introduction Would Be Inappropriate" (Comprehensive)

Responds at National Assembly Political Affairs Committee audit
Kospi's sharp drop: "A contributing factor to some extent"
"Should have lain down" remark: "To sound the alarm for investors"

Lee Chan-jin, governor of the Financial Supervisory Service, said on the 19th that the review had been expedited in part to meet the listing schedule for single-stock leveraged exchange-traded funds (ETFs).

Lee made the remarks in response to a question from Park Dae-chul of the People Power Party during a parliamentary audit of the Financial Supervisory Service and other agencies by the National Assembly’s Political Affairs Committee.

Park pointed out that an ETF must pass two stages before listing: a preliminary review by the Korea Exchange and a review by the Financial Supervisory Service. He noted that, in the case of the single-stock leveraged ETFs, the FSS conducted its review before the exchange had completed its preliminary review, and asked whether this was the first time that had happened. Lee replied, “From what we have checked, it appears to be the case,” adding, “In mid-April, the Financial Services Commission announced the listing schedule as a matter of policy, and we expedited the review in part to meet that schedule.”

Lee Chanjin, governor of the Financial Supervisory Service, responds to a committee member's request for materials during a parliamentary audit of the Financial Supervisory Service and other agencies at the National Assembly's Political Affairs Committee on the 19th. Yonhap News.

Asked whether the FSS had checked the exchange’s preliminary review findings while conducting its own review, Lee said, “We would have to check, but I understand there were no particular issues.”

The single-stock leveraged ETFs were launched on May 27, when products tracking 16 stocks were listed. The FSS said, however, that “the exchange’s preliminary listing review for a fund is not a mandatory prerequisite for the FSS to begin reviewing its registration statement,” adding that it had thoroughly reviewed the securities registration statement submitted on April 28 over a period of 15 days.

Opposition lawmakers also criticized Lee’s remark at a regular press briefing in June that, regarding the listing of single-stock leveraged ETFs, he “should have blocked it even if he had to lie down in front of it.”

When Kim Jae-seop of the People Power Party asked why he had not done so, Lee replied, “The policy had already been announced and finalized.” His response was interpreted as meaning that it would have been difficult to stop the policy in practice. Lee also explained, “I made that remark on June 22 because significant losses for investors were expected,” adding, “I issued a strong message to sound the alarm for investors.”

Director Lee listens to questions from members of the Political Affairs Committee during a parliamentary audit. Yonhap News Agency

Asked whether single-stock leveraged ETFs were partly to blame for the Kospi’s successive sharp drops, Lee acknowledged, “I believe they were a contributing factor to some extent.” In response to Song Eon-seok of the People Power Party, who asked whether the FSS had raised concerns about the volatility of leveraged products, Lee said, “We did not raise the issue directly,” and added, “I regret that.”

Song also pressed Lee on whether he had proposed introducing single-stock leveraged ETFs at a closed-door meeting at the Blue House on January 13 attended by former policy chief Kim Yong-beom and others. Lee replied, “I don’t remember.”

Park Seong-hun of the People Power Party asked whether, shortly after taking office, Lee had reported conflicts of interest requiring him to recuse himself from his duties, as well as private interests, in relation to 14 institutions, including Mirae Asset Global Investments. Lee acknowledged that he had. When Park said, “Approving a revision to the detailed rules that could generate enormous benefits for the company where your son works is clearly self-dealing and a violation of the Conflict of Interest Prevention Act,” Lee responded, “I am not a person with a private interest in relation to the enforcement rules, and there is no connection to my duties.”

When Park asked Lee to identify the key figures behind the introduction of single-stock leveraged products, Lee said, “I don’t think it would be appropriate for me to say,” adding, “It was decided through consultations between the government and the relevant authorities, so I don’t think it would be appropriate to say that any particular person played a key role.”

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