Leveraged exchange-traded funds (ETFs) that track the returns of a single blue-chip stock at twice the performance will be launched in South Korea.

Financial Services Commission Chairman Lee Eok-won (이억원) said at a monthly briefing with the press corps at the Government Complex Seoul on Jan. 28 that he would ease regulations so that leveraged ETFs tracking the returns of a single blue-chip stock at twice the performance can be launched domestically.

The leverage multiple for products slated for listing has been set at plus or minus 2 times. That would make it possible to launch products such as a Samsung Electronics 2-times leveraged ETF or an SK Hynix 2-times inverse ETF.

Lee said, "There was a problem in that diverse demand for ETF investment was not being met due to the issue of asymmetric regulation where products are launched overseas but cannot be launched domestically." He said, "We will swiftly improve regulations to raise the attractiveness of the domestic capital market."

He said the multiple would not be raised to 3 times in order to protect investors.

Lee said, "In the United States, new products launched since 2020 have not been allowed up to 3 times, and existing 3-times ETF products were created before 2020." He said, "From the perspective of investor protection, we will not allow 3 times."

He said he would extend the maturity of options products so that popular overseas dividend products can also be launched domestically, laying the groundwork for a range of covered-call ETFs. He also said he would pursue legislation to introduce active ETFs without index requirements.

Lee also signalled that the government draft of the Digital Asset Framework Act that the Financial Services Commission is currently preparing, a second-stage bill on virtual assets, should include a regulation limiting stake holdings by major shareholders of digital asset exchanges.

He said, "As digital asset exchanges shift from a reporting system to a licensing system, the exchanges' leadership, role and responsibilities will also become stronger and they will take on the character of public infrastructure." He said, "From the perspective of how to impose commensurate responsibility, ownership stake regulation emerges."

He added, "The Digital Asset Framework Act will consist of a total of 135 articles," and "We will strengthen consultations with the National Assembly and relevant ministries so that the submission of the government bill does not get delayed."