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Korea to introduce single-stock 2x leveraged ETFs to entice retail investors back to domestic market

Published: 28 Jan. 2026, 17:21 Updated: 28 Jan. 2026, 19:44

JIN MIN-JI
[email protected]

Financial Services Commission Chairman Lee Eog-weon speaks during a press conference held in the government complex in central Seoul on Jan. 28. [NEWS1]

Korea will introduce leveraged exchange-traded funds (ETFs) that track twice the performance of a single stock, or 2x leveraged ETFs, the Financial Services Commission (FSC) said on Wednesday, as part of efforts to encourage retail investors to return to the domestic market.

FSC Chairman Lee Eog-weon said the authorities will ease regulations to allow the launch of such ETFs and lay the groundwork for a range of covered-call ETFs — investment funds that generate income by writing call options on securities the ETF holds — by expanding the maturities of options products.

“Some ETFs listed overseas have not been launched domestically due to regulatory asymmetries,” Lee said in a press conference held at the government complex in central Seoul. “Investment demand for a variety of ETFs is not being fully met as a result, and we will work quickly to correct these unreasonable regulations.”

Foreign asset managers have listed not only 3x leveraged products tracking the Kospi, but also leveraged and inverse ETFs based on individual stocks such as Samsung Electronics and SK hynix. Current regulations, which limit ETFs to a 30 percent weighting for any single stock and require at least 10 different holdings, have restricted domestic asset managers from designing leveraged ETFs based on individual stocks.

The leverage will be capped at 2x for investor protection, stopping short of the 3x seen overseas. “Even in the United States, new products launched since 2020 are not allowed to offer triple leverage,” he added.

Electronic display board at Hana Bank’s dealing room in central Seoul show Korea’s financial markets on Tuesday. [NEWS1]

The authorities also plan to enable the domestic creation of dividend-focused products that are popular overseas and to move forward with legislation permitting active ETFs without index-tracking requirements.

Lee added that the authorities will work to advance the governance of financial companies through a task force.

“We’re considering measures to strengthen shareholder oversight. For instance, we’ll examine measures such as raising the shareholder vote requirements when appointing a bank holding company CEO.” The improvement measures will be introduced by the end of March.

The statement followed a weeklong special governance inspection by the Financial Supervisory Service (FSS) of eight financial holding firms, including KB, Shinhan, Hana and Woori, which concluded last week.

KB Financial Group Chairman Yang Jong-hee’s term expires in November, while the chairpersons of Shinhan, Woori and BNK Financial Groups, nominated as sole board candidates in December, are set to be confirmed at March shareholder meetings.

“The public is questioning whether the appointment process for financial company CEOs is truly fair and transparent. Financial institutions have an obligation to respond, and that response must be shown not through words, but through actions and results,” Lee added.

He further stressed the need to limit major shareholders’ stakes in virtual asset exchanges, with a 10 to 15 percent limit currently under consideration. On the controversy over expanding the investigative powers of the FSS’s special judicial police, he said their use will be limited to cases of unfair trading in the capital market and crimes affecting the public.

BY JIN MIN-JI [[email protected]]