Listing timeline dispute takes center stage at national audit

Exchange, FSS completed joint review in 29 days

Deputy Prime Minister and Minister of Economy and Finance Lee Hyung-il said Tuesday that he takes the controversy over the introduction of single-stock leveraged ETFs seriously, citing the harm done to investors.

"At the time, the products became entangled with sharp swings in the stock market, which amplified volatility and expanded investor losses — I weigh that heavily," Lee said at the national audit of the Ministry of Economy and Finance held by the National Assembly's Finance and Economy Planning Committee.

Deputy Prime Minister and Minister of Economy and Finance Lee Hyung-il answers lawmakers' questions on residential stability measures at the national audit of the Ministry of Economy and Finance held by the National Assembly's Finance and Economy Planning Committee on Tuesday. [Yonhap]
Deputy Prime Minister and Minister of Economy and Finance Lee Hyung-il answers lawmakers' questions on residential stability measures at the national audit of the Ministry of Economy and Finance held by the National Assembly's Finance and Economy Planning Committee on Tuesday. [Yonhap]

People Power Party lawmaker Ahn Sang-hun pressed Lee at the audit, saying the public widely viewed the launch of single-stock leveraged ETFs as "a project to pump up the stock market ahead of the local elections." He asked whether Lee had raised any concerns about the risks at a Jan. 13 meeting at Cheong Wa Dae to discuss capital market development measures.

Lee said the meeting covered a wide range of product proposals and was not focused on any single one. He reiterated that he takes the expansion of investor losses seriously.

First Vice Minister of Economy and Finance Kwon Dae-young said the ministry had been aware of the risks from a regulatory arbitrage standpoint but recalled a shared understanding that the regime was necessary domestically. "We were trying to ease regulatory asymmetry, but the outcome ran counter to our policy intent by amplifying market volatility — I again feel the weight of that," he said.

People Power Party lawmaker Park Soo-young raised allegations of political interference, citing internal Financial Services Commission documents as evidence that the product launch was moved up to just before the local elections.

According to Park, the launch of single-stock leveraged ETFs had originally been scheduled for the second half of the year but was brought forward to the second quarter in March. The listing date was then set for May 22 before being changed to May 27 — one week before the local election vote.

"May 27 was one week before the local election," Park said, arguing that political considerations drove the rushed timeline. She also took issue with the fact that the Korea Exchange and the Financial Supervisory Service conducted their reviews simultaneously, completing the entire process in just 29 days.

Kwon said he was sorry that the public had ultimately suffered losses. "I want to make absolutely clear that there was no political consideration involved, and that we did not neglect our duties as responsible stewards in carrying out this policy," he said.


y2k@heraldcorp.com