The government will bring forward a measure to raise the basic margin requirement for single-stock leveraged exchange-traded funds (ETFs) tied to Samsung Electronics and SK Hynix, starting on July 31.

The Financial Services Commission said on Thursday it will raise the basic margin requirement for single-stock leveraged products to 30 million won in cash from the current 10 million won from July 31.

The FSC previously announced measures to supplement rules for single-stock leveraged products on July 16. At the time, it planned to implement the higher margin requirement around Aug. 5, and to exclude substitute securities such as stocks, ETFs and bonds from margin around Aug. 19.

However, after President Lee Jae-myung (이재명) called for swift implementation of related measures at a cabinet meeting on July 21, relevant agencies and the financial investment industry brought forward their schedule for systems development.

As a result, from July 31, investors must hold at least 30 million won in cash to newly trade or make additional purchases of single-stock leveraged products listed in South Korea and abroad.

A practice in which brokerages applied a lower basic margin requirement after a certain period, taking account of trading experience, will also be restricted. Some brokerages currently adjust margin requirements by investor once three months have typically passed since trading.

Even if substitute securities are sold, the sale proceeds will not be recognised as basic margin until the funds are actually deposited as cash.

Currently, investors can repurchase single-stock leveraged products by recognising sale proceeds as cash from the day of sale of stocks and other assets. Going forward, the cash must be deposited for it to be recognised as margin on the second trading day after sale (T+2) when settlement is completed.

Amounts borrowed using sale proceeds as collateral will also be excluded from the basic margin requirement. The measure is intended to reduce excessive turnover trading that repeats same-day sales and repurchases.

The FSC plans to recommend that brokerages that fail to complete systems development by the deadline be restricted from handling new trades of single-stock leveraged products.

A plan to strengthen management of price divergence to reduce gaps between an ETF's net asset value (NAV) and its market price is due to take effect from Aug. 19 after revisions to exchange rules and enforcement regulations.

It will also discuss with relevant agencies bringing forward a plan to raise the trading unit to 20 shares from the current one share, earlier than the initially scheduled November.

An FSC official said it will continue to monitor market impacts after the measures take effect and will consider additional steps by gathering views from experts and investors if the market does not stabilise.