South Korea Ministry of Economy and Finance said authorities will implement supplementary controls on single-stock leveraged products after a joint market review found that the rapid rise in their market capitalization and trading value could add to stock market volatility. Until market conditions stabilize, new product launches will be temporarily suspended and advertising will be fully banned. The package raises the basic margin deposit for domestic and overseas single-stock leveraged products to KRW 30 million from KRW 10 million, with the full amount to be paid in cash. Authorities will also strengthen investor risk warnings and education, increase trading lot sizes, tighten liquidity providers' obligations to keep market prices from deviating excessively from underlying asset value, and strengthen sanctions on securities firms and asset managers that breach those rules. The existing deviation-rate management standards are 3% for domestic equity exchange-traded funds and exchange-traded notes and 6% for overseas equity ETF/ETNs. Participants agreed to continue closely monitoring the products' market impact and to consider additional measures if needed. The Financial Services Commission is due to publish the detailed measures separately. Separately, the meeting said financial market moves after the Bank of Korea's policy rate increase were limited so far, but authorities will keep monitoring conditions and proceed with measures to ease the burden on vulnerable borrowers, including small and medium-sized enterprises, small merchants and households.

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