South Korea’s Financial Services Commission (FSC) published a proposal to revise capital market rules to upgrade regulation of the domestic exchange-traded fund (ETF) market and reduce regulatory gaps between domestically listed ETFs and overseas listed ETFs. The package would broaden the range of products that can be listed locally while aligning investor protection requirements across domestic and overseas leveraged products. Key measures include enabling the domestic listing of single-stock ETFs tracking blue-chip stocks by changing rules that currently require ETFs to hold at least ten underlying items (five for exchange-traded notes (ETNs)) with a 30 percent cap per item, with the same approach extended to ETNs via Korea Exchange (KRX) rule changes. Leveraged single-stock ETFs and ETNs would remain restricted to 200 percent (2x) exposure, while investor protection would be strengthened through an additional one-hour learning session for new investors in single-stock leveraged ETFs and ETNs, extension of the KRW10 million base deposit requirement to new investors in overseas listed leveraged ETFs and ETNs, and clearer product descriptions requiring “single-stock” to be displayed rather than “ETF” for domestically listed single-stock leveraged ETFs. Separately, to support a wider range of ETF strategies including covered call ETFs, the FSC would broaden domestic options availability by expanding weekly option expiries for KOSPI200 and KOSDAQ150 to Monday through Friday and introducing weekly options on domestically listed individual stocks and monthly and weekly options on domestically listed ETFs; it also plans to pursue an amendment to the Financial Investment Services and Capital Markets Act to permit actively managed ETFs. The proposed revisions to the Enforcement Decree of the Financial Investment Services and Capital Markets Act and the regulation on financial investment businesses are open for comment from January 30 to March 11, 2026. The FSC expects rule changes and system development to be completed in the second quarter of 2026 to facilitate the launch of single-stock ETFs and ETNs, with KRX rule updates for new options products planned for the first half of 2026; the enhanced leveraged-product safeguards would take effect after Korea Financial Investment Association rule updates, and a bill to introduce active ETFs is planned for submission to the National Assembly in the first half of 2026.
South Korea Financial Services Commission 2026-01-30
South Korea Financial Services Commission consults on reforms to allow single-stock and active ETFs and tighten leveraged ETF safeguards
South Korea's Financial Services Commission proposed revising capital market rules to enhance regulation of the domestic ETF market, aligning investor protection for domestic and overseas leveraged products. The proposal includes enabling single-stock ETFs, expanding options, and strengthening investor safeguards, with public comments open until March 11, 2026, and implementation expected in the second quarter of 2026.