Financial Services Commission Reviews Introduction of Basic Deposit for High-Risk ETFs and ETNs

[Asia Economy Reporter Park Jihwan] The Financial Services Commission is considering setting a minimum deposit requirement for high-risk Exchange-Traded Funds (ETFs) and Exchange-Traded Notes (ETNs).

According to financial authorities on the 10th, the Financial Services Commission is reviewing measures to set a minimum deposit for products that are difficult for investors to understand and carry high risks. This is part of investor protection measures following the increased investment risks of products such as crude oil futures leveraged ETNs. The minimum deposit refers to the funds that investors are required to keep in their accounts.

The target will likely be leveraged products involving borrowed investments and inverse products that track indices inversely, rather than all products. Products that simply track stock indices, such as ETFs that are easy for investors to understand, will be excluded.

Currently, the minimum deposit for futures and options trading is 10 million KRW, and for Equity-Linked Warrants (ELWs), it is 15 million KRW.

The Financial Services Commission is currently consulting with the Korea Exchange on specific details such as the scope and amount of the minimum deposit. If an agreement is reached, an announcement is expected within this week.

Additionally, the commission is also considering a face value consolidation for these products. Face value consolidation is a method of combining stocks with low face values to increase the face value. While there is no change in the value of the securities, the market price rises, which helps reduce volatility.

A Financial Services Commission official stated, "We are currently in consultation with the exchange regarding these measures, and the announcement timing has not been set for this week."

This content was produced with the assistance of AI translation services.