South Korea's financial authorities will limit the size of new stock-loan issuance and set borrower-by-borrower loan caps for the online investment-linked finance sector, after stock loans expanded rapidly amid a recent stock market rally.

The Financial Services Commission and the Financial Supervisory Service said on Tuesday they will implement measures to manage stock-loan risks in the sector from July 16.

A stock loan is a loan in which borrowers use shares held in a securities account as collateral to borrow funds and invest in stocks.

As of end-June, stock-loan balances in the sector stood at 898.3 billion won, up 374.5 billion won from 523.7 billion won at end-December. The increase rate reached 71.5 percent.

Stock-loan balances in the sector rose to 172.5 billion won at end-2024 and 523.7 billion won at end-2025, before expanding to 689.5 billion won at end-March and 898.3 billion won at end-June. Annual increases also accelerated to 140.7 billion won in 2024, 351.3 billion won in 2025 and 374.5 billion won in the first half of this year.

The authorities decided to limit monthly new stock-loan issuance by online investment-linked finance operators to reduce concentration risk that could arise when funds flow into a specific loan product.

Under the measures, operators must keep monthly new stock-loan issuance within 30 percent of the previous month’s new linked-loan issuance excluding stock loans.

For example, if the previous month’s new issuance of general linked loans totals 10 billion won, new stock-loan issuance the following month must be managed within 3 billion won.

The authorities provided an exception so that the cap on the new-issuance ratio may not apply if an operator keeps stock-loan balances at each month-end from July this year at or below the end-June level.

Borrower-by-borrower stock-loan limits will also be capped at 1 billion won on an outstanding-balance basis. The authorities said the move aims to prevent excessive lending from concentrating on the same borrower and reduce loss risks from share price declines.

The authorities plan to monitor each operator’s implementation status and, if necessary, guide operators to strengthen stock-loan risk management through steps such as meetings with management.