FSS Governor admits expedited review of single-stock leverage ETFs

During a National Assembly audit of the Financial Supervisory Service (FSS), Governor Lee Chan-jin admitted that the review process for single-stock leverage Exchange Traded Funds (ETFs) was expedited to meet a policy-driven launch schedule set by the Financial Services Commission. This expedited process involved the FSS beginning its review before the Korea Exchange had completed its preliminary examination, a departure from standard procedures.

Lee addressed previous controversial remarks regarding the ETF launch, explaining that his suggestion of “lying down to stop it” was intended as a strong warning to alert investors to potential risks. He also acknowledged that the introduction of these products contributed to a certain extent to the decline of the KOSPI.

The audit also covered several other financial oversight issues. Lee expressed support for reviewing high interest rates on stock sale collateral loans and automatic loan services provided by securities firms. Additionally, he stated that the FSS is considering legal measures to prohibit moneylenders from providing loans to soldiers in mandatory military service to prevent high delinquency rates among young service members.

Regarding market stability, Lee pledged to strengthen responses to unfair trading practices and proactively manage risks related to real estate project financing and household debt. He also addressed potential conflicts of interest regarding his son’s employment at an asset management firm, stating there was no job-related connection.