South Korea is set to announce measures soon concerning leveraged exchange-traded funds (ETFs) tied to stocks like Samsung Electronics and SK Hynix, which are exacerbating stock market volatility.

The head of the Financial Services Commission, Lee Eog-weon, stated that the agency is in close consultation with the Ministry of Finance, the Bank of Korea, and the Financial Supervisory Service to develop measures aimed at protecting investors and ensuring market stability. According to a text message sent to media outlets, the Financial Services Commission will issue a statement regarding leveraged ETFs around 4 p.m. local time on Thursday.

These leveraged ETFs, launched just two months ago, amplify the daily price movements of their underlying stocks by a factor of two. Many market participants believe leveraged ETFs are intensifying market volatility because these products require daily rebalancing of funds to maintain their promised return ratios.

The Kospi index has surged more than 100% this year, reaching a record high in June, but has since entered a bear market. On Thursday, the benchmark index fell by as much as 7.6% before paring losses in afternoon trading. Shares of both SK Hynix and Samsung Electronics dropped over 7%.

Instances of the Kospi index moving more than 5% in a single day have become increasingly frequent, while its 30-day volatility has also soared to a historic high.

When asked whether authorities were considering a temporary halt in trading for such ETFs, Lee Eog-weon stated that, given the potential for significant side effects, authorities are conducting a "comprehensive review of the matter." Pressed on whether leveraged ETFs are amplifying market volatility, he avoided a direct answer, noting that "it depends on the degree."

This development follows comments from South Korean President Lee Jae-myung, who stated that the stock market has become "quite unstable" after its unprecedented rally and urged regulators to prepare follow-up measures.