[Subtitle News] "Was I the Only One Who Didn't Know?" Regret Over Popular Stock Bets: "I Should Have Stopped It Even If It Meant Lying Down"

Financial Supervisory Service (FSS) Governor Lee Chan-jin has expressed deep concern over the concentration of trading in leveraged ETFs—exchange-traded funds—based on single stocks like Samsung Electronics and SK Hynix.

He pointed out that excessive day trading is generating massive commission fees, stating, "It is resulting in nothing but lining the pockets of securities firms."

During a press conference held today (June 22), Governor Lee said, "I am deeply concerned about the significant side effects that have emerged since the launch of single-stock leveraged ETFs," adding, "The scale of these single-stock leveraged products has exceeded 14 trillion won, and approximately 92% of the holders are individual investors."

He added, "The turnover rate, even at its lowest, is around 130%, and there have been times when it reached as high as 200%."

This means that trading volume equivalent to twice the net asset value of the ETFs occurred in a single day, a figure that clearly demonstrates an overheated market excessively focused on short-term trading.

Governor Lee explained, "Trading commissions are estimated to be between 5 trillion and 10 trillion won," adding, "This means investors are paying 40% to 70% of the ETF's total market capitalization in commissions."

Governor Lee, who even joked that it "made his stomach ache," criticized the trading pattern for only benefiting securities firms, saying, "In a gambling den, isn't it the person who takes the 'cut'—the commission—who makes the most money?"

He also openly expressed regret regarding the timing of the introduction and listing of single-stock leveraged ETFs, admitting, "It is true that we prepared it in a hurry at the time of introduction."

He continued, "At the time, we thought it would be a way to bring domestic investors who were trading leveraged ETFs in Hong Kong back to the local market, but the effect has been minimal while the side effects have grown too large," adding, "I am personally reflecting on whether I should have stopped it, even if it meant lying down to block it."

Previously, financial authorities had permitted the introduction of leveraged ETFs for top market-cap stocks to resolve asymmetric regulations, as such single-stock leveraged products were already being traded on overseas exchanges.

Regarding "debt-financed investment" in the stock market, Governor Lee said, "Because the market has risen so rapidly, the perceived impact of the credit loan balance ratio is diminishing," adding, "We will continue to monitor the situation carefully so as not to be buried by statistical illusions."

Reported by Kim Minjeong | Video by Shin Jin-soo | Video Editing by Lee Da-in | Graphics by Lee Soo-min | Produced by SBS Digital News
※ Please note: This article was translated by AI and may contain errors.