Discussions have been held among major South Korean asset management firms regarding the implementation of investor protection measures for single-stock leveraged exchange-traded funds (ETFs), including an increase in the minimum deposit requirement.

The Korea Financial Investment Association stated that the CEOs of ten large domestic asset managers deliberated on these protective steps, which also involve spreading out the timing of rebalancing trades.

According to a declaration from the association, participants concurred on the necessity to raise the minimum deposit threshold for investing in such leveraged products from its current level of 10 million won (approximately $6,714).

To mitigate the market impact of daily rebalancing trades, which are heavily concentrated just before the market close, the asset management companies indicated a need to work on distributing these rebalancing activities across various times throughout the trading day.

They also highlighted the requirement to strengthen the role of liquidity providers as market stabilizers.

Citing data from the Korea Capital Market Institute, the Korea Financial Investment Association reported that, since the launch of the relevant leveraged ETFs, the estimated daily stock trading volume needed for rebalancing ranges between 700 billion and 2.1 trillion won.