South Korea's ruling party plans to push for national compensation for losses in Samsung Electronics and SK Hynix leveraged ETFs, and demands that the government be held to account
According to similar news, Kim Eun-hye, a member of the Korean National Power Party (Kookmin Power), is studying whether investors who lost money after investing in single-share leveraged ETFs from Samsung Electronics and SK Hynix can file national compensation lawsuits with the government. Congressman Kim Eun-hye's office has recently begun collecting opinions from relevant investors, investigating the scale of losses, and considering promoting accountability and investor relief plans through the National Assembly Administration Committee. The focus of the dispute is whether the Korea Financial Services Commission previously fully assessed risk and established sufficient investor protection mechanisms when launching a single-share leveraged ETF.
The Korea Financial Services Commission amended the relevant provisions of the Capital Markets Law in April of this year to allow the launch of leveraged ETF products that track the rise and fall of Samsung Electronics and SK Hynix in a single day starting May 27. Capital poured in rapidly after the product was launched, and the mechanized position adjustment mechanism is thought to be likely to amplify market fluctuations and trigger short gamma (Short Gamma) risk discussions.
As of June 25, the net asset value of the 14 leveraged ETFs involved reached 16.28 trillion won, and the single-day turnover once rose to 14.48 trillion won. Subsequently, the Korea Financial Services Commission announced strengthened regulatory measures on July 16 to raise the basic deposit requirement for investors to purchase related products from 10 million won to 30 million won, and implemented it ahead of schedule until July 31.
The National Power Party believes that the regulatory authorities drastically adjusted the rules only a month and a half after the product was launched, reflecting the lack of previous risk management and investor protection measures, and therefore plans to investigate the approval and risk assessment process between the Financial Services Commission, the Financial Supervisory Service, and the Korea Exchange. However, the Korea Financial Services Commission responded that the relevant system has gone through formal procedures such as 40-day legislative notice, impact assessment, and legal review, and that the product launch schedule has also been publicly announced in advance.
If it eventually enters into a national compensation lawsuit, the core dispute will focus on whether financial regulators have committed illegal acts and whether there is a direct causal relationship between policy decisions and investors' losses.
