FSS chief calls for better consumer protection from asset managers following market volatility

The chief of the country’s financial watchdog urged asset managers on Monday to better protect consumers following increased market volatility.

In a meeting with the heads of major asset managers, Lee Chan-jin, the governor of the Financial Supervisory Service (FSS), said that their role and responsibilities are increasingly important in selling and managing exchange-traded funds (ETF) as the market size nearly doubled this year.

“Our capital market is facing increased risk factors such as explosive growth, extreme concentration and increased market volatility,” he said.

Lee cited sharp growth in the local ETF market, as its net asset value had risen to 507.4 trillion won ($337.1 billion) by the end of May from 297.1 trillion won at the end of last year.

He also urged asset managers to refrain from hurting fair competition when selling their products to consumers.

In particular, the FSS chief has expressed concerns regarding the newly introduced single-stock leveraged ETFs, saying that the products have generated many side effects.

Earlier, he said that the overheated rush to single-stock leveraged ETFs with underlying assets — Samsung Electronics and SK hynix — has shown extreme turnover since their introduction in late May, and that his agency is reviewing measures to buffer potential adverse impacts on investors.

Yonhap