South Korea to detail 20-share trading unit for single-stock leveraged ETFs next month
In short
South Korea's Financial Services Commission plans to announce next month detailed rules raising the trading unit for single-stock leveraged ETFs to 20 shares, Yonhap reported. Authorities are considering letting investors holding fewer than 20 shares sell those odd lots through after-hours closing-price trading at that day's closing price. Market data cited by Yonhap show the leveraged products have cooled since July, with their combined market capitalisation down to 6-7 trillion won from a June peak of 16.5 trillion won.
Why it matters
The rules under discussion set the exit route for retail investors left holding odd lots of leveraged products tied to Samsung Electronics and SK Hynix, two stocks that dominate the Korean market. The documents frame the wider measures as an effort to curb small, short-term trading after a run-up in leverage products earlier this year; the market indicators cited suggest volatility has already eased.
Key facts
- The Financial Services Commission plans to announce next month detailed measures to expand the trading unit of single-stock leveraged ETFs to 20 shares. [ 1 , 2 ]
- Authorities are considering allowing investors holding fewer than 20 shares to sell those odd lots through after-hours closing-price trading at the day's closing price. [ 1 , 2 , 3 ]
- The after-hours closing-price session runs from 15:40 to 16:00, after the regular session ends at 15:30. [ 1 ]
- The FSC announced in July a plan to strengthen investment requirements for single-stock leveraged ETFs, including the 20-share trading unit. [ 1 ]
- The combined market capitalisation of the 16 single-stock leveraged products rose from 4.4 trillion won on their May 27 listing day to 16.5 trillion won on June 25, and has since fallen to 6-7 trillion won. [ 1 ]
- Trading value in the products peaked at 19.4 trillion won at the end of June and has fallen to 500-800 billion won. [ 1 ]
- The Kospi 200 volatility index (VKOSPI) fell from 96.9% on June 29 to 41.0% on October 2. [ 1 ]
- Maeil Business reported the 20-share trading unit expansion will take effect from November. [ 3 ]
Confirmed by several sources
Still unclear
- The timing of implementation of the 20-share trading unit. Yonhap says the detailed plan will be announced next month and that a grace period of several months is possible before implementation, while Maeil Business says the expansion will take effect from November.
- Whether a grace period for policy guidance will be granted before the new trading unit applies. Yonhap says only that authorities 'may' set a grace period of several months; no other document addresses it.
- Whether the odd-lot after-hours disposal route is final. Yonhap and Chosun Ilbo describe it as under review or discussion, not decided.
What local media are saying
Timeline, local time
- Yonhap reports the FSC plans to announce detailed 20-share trading unit measures next month and is considering after-hours closing-price trading for odd lots. [ 1 ]
- Chosun Ilbo reports authorities are discussing letting holders of fewer than 20 shares sell via after-hours closing-price trading, citing the financial investment industry. [ 2 ]
- Start of the after-hours closing-price trading window in which 1-19 share odd lots could be sold at the day's closing price; the window ends at 16:00. [ 1 ]
- Maeil Business reports the trading unit expansion and says it takes effect from November. [ 3 ]