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Korea's FSC chief apologises over leveraged ETF losses, denies presidential office order
En breve
Financial Services Commission chairman Lee Eog-weon (이억원) told a National Assembly audit in Seoul on October 8 that single-stock leveraged ETFs were not introduced on orders from the presidential office (Cheong Wa Dae), saying the FSC adopted them through its own procedures after hearing views. He stood and apologised for the losses, concerns and harm that followed, and disputed a foreign bank report estimating retail investor losses at about 54 trillion won.
Leer la noticia completa 2 min de lectura
Financial Services Commission chairman Lee Eog-weon (이억원) said on October 8 that single-stock leveraged exchange-traded funds were not introduced on the instructions of the presidential office, Cheong Wa Dae. Answering People Power Party lawmaker Park Jun-tae (박준태) at the National Assembly Political Affairs Committee audit in Seoul, Lee said the FSC heard various views and consulted other ministries, and that there had long been calls to allow in Korea products available abroad. He said the legal basis was an enforcement decree amendment under FSC jurisdiction. [ 3 , 4 , 6 , 12 ]
Lee described the process: a legislative notice from January 30, inter-ministry consultation, a plenary meeting, comment collection, then products created by asset managers that passed securities registration and listing reviews. Responding to Song Eon-seok (송언석), who said a January 28 FSC report planned a second-half launch but a March 18 meeting moved it to the second quarter, Lee said the notice ran 40 days to March 11 without notable objections and that the launch followed the schedule rather than being brought forward. The ETFs were listed on May 27. [ 9 , 11 , 12 , 15 ]
After Cho Jeong-hun (조정훈) asked him to stand and apologise, Lee did so, saying that as head of the financial authorities he was sincerely sorry for causing concern. He said that regardless of the policy's necessity it had resulted in losses, concerns and harm, and that he took to heart the points the FSC had not examined carefully enough. Cho said the FSC had no analysis of the products' effect on the currency market; Lee said the currency market had been very difficult at the time, citing fears the won would pass 1,500 to the dollar and faster capital outflows. [ 4 , 5 , 9 , 11 , 12 , 15 ]
Lee called a foreign bank report estimating about 54 trillion won in retail investor losses an unofficial trading desk commentary that was inaccurate, saying it added up losses without subtracting gains and covered all leveraged products. On market volatility, he said the ETFs may have played a part but global semiconductor swings and the concentration of semiconductor stocks in Korea also contributed. [ 4 , 6 , 12 ]
The parties clashed over responsibility. Park Jun-tae called President Lee Jae-myung and Cheong Wa Dae the principal offenders, citing multiple statements that former policy chief Kim Yong-beom (김용범) raised leveraged ETFs at a closed meeting on January 13, and said someone would go to prison. People Power Party lawmakers criticised the decision not to call Kim as a witness. Democratic Party lawmakers called the allegation a conspiracy theory; Park Hong-bae (박홍배) said the 54 trillion won figure was exaggerated, and Kim Hyun-jung (김현정) blamed the Korea Exchange's failure to manage high-frequency algorithmic trading. [ 3 , 10 , 11 ]
Por qué importa
The products, listed on May 27, have become a political dispute, with People Power Party lawmakers alleging presidential office involvement and seeking testimony from former policy chief Kim Yong-beom (김용범), while Democratic Party lawmakers call that a conspiracy theory. The hearing puts the regulator's handling of high-risk retail products and the size of investor losses under parliamentary scrutiny.
Datos clave
- At the National Assembly Political Affairs Committee audit of the Financial Services Commission on October 8, chairman Lee Eog-weon denied that single-stock leveraged ETFs were introduced on Cheong Wa Dae's instructions. [ 3 , 4 , 6 , 12 , 15 ]
- Lee said the legal basis was an amendment to an enforcement decree, which falls under the FSC's jurisdiction, and that it went through legislative notice, inter-ministry consultation and comment collection before asset managers created products that passed securities registration and listing reviews. [ 3 , 4 , 6 , 12 ]
- Lee apologised, saying that regardless of the policy's necessity it had resulted in losses and concerns, and that the FSC would keep watching closely. [ 4 , 5 , 6 ]
- Asked by Cho Jeong-hun (조정훈) to stand and apologise to the public, Lee stood up and said he was sorry as head of the financial authorities. [ 11 , 12 , 15 ]
- Lee said a foreign investment bank report estimating about 54 trillion won in retail investor losses was an unofficial market commentary from a trading desk and inaccurate. [ 4 , 6 , 12 ]
- The single-stock leveraged ETFs were listed on May 27. [ 9 , 15 ]
- People Power Party lawmakers alleged Cheong Wa Dae involvement and pressed for former policy chief Kim Yong-beom to be called as a witness; Democratic Party lawmakers called the allegation a conspiracy theory. [ 10 , 11 ]
- Lee said volatility in the domestic market had several causes, including large swings in global semiconductor stocks and the high concentration of semiconductor stocks in Korea's market. [ 12 ]
Confirmado por varias fuentes
- Lee Eog-weon denied that single-stock leveraged ETFs were introduced on the presidential office's instructions. [ 3 , 4 , 6 , 8 , 12 , 15 ]
- Lee apologised to the public for the losses and concerns linked to single-stock leveraged ETFs. [ 4 , 5 , 6 , 7 , 8 , 11 , 12 , 15 ]
- Lee called the foreign bank report of about 54 trillion won in retail losses unofficial and inaccurate. [ 4 , 6 , 12 ]
- Lee said the products' legal basis was an enforcement decree amendment under FSC jurisdiction. [ 4 , 6 ]
- The ETFs were listed on May 27. [ 9 , 15 ]
Aún sin aclarar
- Whether Cheong Wa Dae or former policy chief Kim Yong-beom directed the introduction of the products. People Power Party lawmakers allege it, citing a January 13 meeting; Lee denies it and Democratic Party lawmakers call it a conspiracy theory.
- The size of retail investor losses. A foreign bank report put losses at about 54 trillion won; Lee and Democratic Party lawmaker Park Hong-bae (박홍배) said it sums losses without netting gains, and Lee said it covers all leveraged products.
- Whether the launch was brought forward. Song Eon-seok (송언석) said a January 28 FSC report planned a second-half launch and a March 18 meeting moved it to the second quarter; Lee said the launch followed the normal schedule. Only one outlet reports the dates.
- Lee's figures on foreign exchange outflows before the launch. Reported by one outlet only.
Qué dicen los medios locales
Cronología, hora local
- Newsis reports Lee denying that the ETFs were introduced on Cheong Wa Dae's orders. [ 3 ]
- Yonhap reports Lee's answers at the morning session, including his rejection of the 54 trillion won loss report and his apology. [ 4 ]
- Chosun Ilbo reports Lee apologising after Cho Jeong-hun (조정훈) demanded a public apology. [ 7 ]
- Newsis reports the clash between parties over responsibility for the ETFs. [ 10 ]
- Newsis reports Lee apologising again after being asked to stand. [ 15 ]