"Should Have Blocked It at All Costs": FSS Chief Criticizes Single-Stock Leverage Products

[Anchor]

Lee Chan-jin, Governor of the Financial Supervisory Service (FSS), has issued a sharp criticism of single-stock leverage products that track twice the daily fluctuations of companies like Samsung Electronics and SK Hynix. He stated that he should have "blocked their introduction even if it meant lying down to stop it." He emphasized that these products increase stock market volatility and encourage day trading, ultimately benefiting only securities firms.

Reporter Lee Tae-kwon has the story.

[Reporter]

FSS Governor Lee Chan-jin unleashed a barrage of criticism regarding single-stock leverage products tied to Samsung Electronics and SK Hynix.

Since their launch last month, the market capitalization of these leverage and inverse products has exceeded 15 trillion won, with cumulative trading volume surging to 173 trillion won.

Governor Lee expressed deep concern that these products are highly likely to lead to losses for individual investors.

[Lee Chan-jin/Governor of the Financial Supervisory Service: Most of these are held by individual investors. It seems to be around 92%. Even though these are extremely risky investments, there is currently no cooling-down effect....]

In fact, during consecutive market downturns, the maximum drawdown for these products reached an average of 36.9%.

He particularly criticized the situation, noting that the average daily turnover rate soared up to 200%, resulting in a scenario where only securities firms are profiting from trading commissions.

[Lee Chan-jin/Governor of the Financial Supervisory Service: It is estimated that (trading commissions) could exceed 10 trillion won. Investors are paying anywhere from 40% to as much as 70% (of the total market cap) in fees.]

He also remarked that while these products were introduced to encourage "Seohak Ants" (individual investors investing in foreign stocks) to bring their capital back to the domestic market due to the high exchange rate, the effect has been minimal. He went as far as to say he regrets not having blocked their introduction, even if it meant "lying down to stop it."

He added that the side effects are too significant, as rapid stock price fluctuations can lead to major shocks to household finances, and that the government is deeply concerned about the situation.

Governor Lee stated that he is consulting with the Financial Services Commission to consider ways to mitigate the impact.

Regarding the situation where Mirae Asset Securities was allocated zero shares during the SpaceX listing, he called it an "absurd situation" and emphasized that the FSS is investigating whether the risk disclosures related to overseas investments were appropriate.

(Reported by Shin Jin-soo and Kim Hak-mo | Video edited by Choi Hye-ran | Graphics by Jang Chae-woo)
※ Please note: This article was translated by AI and may contain errors.