Financial Supervisory Service Governor Lee Chan-jin faced a second day of pointed questioning Thursday as the National Assembly’s political affairs committee reopened debate over how 16 single-stock leveraged exchange-traded funds reached the market in just 29 days—and why individual investors later booked more than 2.32 trillion won in realized losses on products tied to Samsung Electronics and SK hynix.
Compressed reviews
Opposition lawmakers displayed timelines showing the typical exchange preliminary review and FSS registration process averages 62 days for novel funds, or 43 days for plain-vanilla index trackers. The chip-linked leveraged suite debuted on May 27 after the Financial Services Commission announced a fixed listing date as a policy goal, and Lee acknowledged reviews were “expedited to meet that timetable.”
He stopped short of naming officials who set the calendar, saying it would be “inappropriate” to single out individuals. President Lee Jae Myung has defended the product class as a way to keep leveraged demand onshore rather than in U.S.-listed vehicles that pressure the won, but auditors asked whether retail safeguards were sacrificed for speed.
Card and brokerage spillover
Credit-card marketers have not been direct issuers of the ETFs, yet committee members tied the hearing to broader household-risk themes: minimum cash deposits for trading the funds were raised to 30 million won in August, but only after volatility amplified the Kospi’s October slide. FSS data covering 10 securities firms showed retail participants dominated turnover, while foreign funds largely sat out.
Lee said he regretted not blocking the launch earlier, referencing a June remark that he should have “lain down” in front of the policy if necessary. He maintained the FSS lacked authority to overturn a cabinet-level enforcement decree once the Capital Markets Act rules were amended in April.
What regulators promise next
The FSC halted new listings of single-stock leveraged ETFs in July until markets stabilize. Thursday’s hearing focused on whether existing holders should receive additional risk disclosures on monthly card statements and whether brokers misclassified suitability when pitching the products to borrowers already carrying revolving credit balances.
Committee staff said written follow-up questions would probe internal chat logs between the FSC and FSS in the week before May 15, when the listing date was made public. For card issuers watching the audit, the takeaway is political: any future “democratization” product that touches leveraged equity exposure will face a longer paper trail—and louder Assembly scrutiny—than the May rollout received.