The South Korea Financial Services Commission published an early implementation plan for tighter controls on single-stock leveraged exchange-traded funds and exchange-traded notes, accelerating the strengthened basic deposit requirement to July 31 from the previously planned August rollout. The main change is that retail investors will be able to make new purchases or additional purchases of domestic and overseas listed single-stock leveraged products only if they hold more than KRW 30 million in cash, replacing the current KRW 10 million threshold that could include stocks, ETFs and bonds as substitute collateral at a 70% recognition rate. For these products, substitute securities will no longer count toward the minimum deposit, and the rule will also be tightened operationally so that proceeds from securities sales count as cash only when settlement is completed on T+2. Loan amounts secured against sale proceeds will be excluded from the deposit calculation. The strengthened requirement will apply equally to existing investors when they add to positions, and firms will no longer be allowed to relax the deposit requirement based on an investor's trading experience, although they may still tighten it. Brokerages that do not complete the required systems work by the deadline are set to face a recommendation to restrict new transactions in these products. Separately, authorities already suspended new listings and banned advertising on July 16, while stronger premium-discount management obligations and penalties are scheduled for Aug. 19 and a larger trading unit is to be discussed for implementation faster than the original November timetable. The FSC said authorities will continue to push the measures quickly, monitor market conditions and assess the impact of the revised framework. If the market does not stabilize, additional measures will be considered after further discussions with experts and investors.

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