Trading in leveraged ETFs tied to Samsung and SK Hynix shrinks sharply after regulatory crackdown

South Korea’s experiment with single-stock leveraged ETFs went from zero to disaster in about six weeks. Trading volumes in 2x leveraged products tracking Samsung Electronics and SK Hynix have collapsed after regulators effectively slammed the door on retail access, tripling minimum deposit requirements and halting new listings entirely. From frenzy to free fall When 16 single-stock leveraged ETFs tied to South Korea’s semiconductor giants debuted on May 27, retail investors piled in with net retail purchases surging past 13 trillion won, roughly $9 billion, in a remarkably short window. At their peak, these leveraged products accounted for up to 70% of total trading value in Samsung and SK Hynix stocks. Then semiconductor prices turned south, and the 2x leverage did exactly what 2x leverage does in a downturn. One of the most popular products, the KODEX SK Hynix Single Stock Leverage ETF, fell nearly 70% from its June peak. Combined assets under management across leveraged ETFs cratered from approximately $50 billion to around $26 billion, a decline of nearly half. Regulators step in, finance minister apologizes By mid-July, South Korean financial authorities had seen enough. They...