South Korean financial regulators are discussing relevant measures: raising the minimum trading unit of individual stocks with a leverage of ETF to 20 lots, and at the same time allowing individual investors who hold less than 20 lots of this product to sell their remaining positions at the post-market closing price.
According to news from the financial investment industry on October 5th, the South Korean Financial Services Commission plans to announce detailed guidelines for these regulatory revisions next month. This is a follow-up measure to the policy proposed in July; at that time, it was suggested to increase the trading unit to 20 lots in order to curb speculative trading on individual stocks with high leverage.
Once the minimum trading unit is increased to 20 shares, investors holding 1 to 19 shares will not be able to sell during normal trading hours. As a remedial measure, regulatory authorities are considering allowing investors to use the after-hours closing price trading system to sell fractions of shares less than 20 shares within a specific period of time.
Regular trading closes at 15:30, and the after-hours trading for closing prices is from 15:40 to 16:00. If this mechanism is implemented, investors will be able to sell leveraged ETF shares in amounts of less than 20 lots at the daily closing price.
However, the price for trades at the closing price after the market closes is fixed at the daily closing price, which imposes certain limitations compared to trades during the market session. Therefore, regulatory authorities may set a buffer period of several months before implementing the new regulations to ensure that investors are fully informed about the policy and have ample time to liquidate their positions on their own.
Even after the window period for trading in fragmented shares after the market closes, investors can still apply for the securities company to directly repurchase the remaining shares to complete the settlement.
Since the regulatory authorities introduced this system adjustment, the previously overheated leveraged ETF market has shown signs of stabilization. The total market value of leveraged ETF of 16 individual stocks soared from 4.4 trillion Korean won at the time of their listing on May 27 to 16.5 trillion Korean won on June 25, but has recently dropped significantly, stabilizing in the range of 6 to 7 trillion Korean won.












