Remarks made at National Assembly audit of Financial Supervisory Service
Financial Supervisory Service chief Lee Chan-jin said Monday that the review of single-stock leveraged ETFs was expedited in part to meet a set launch schedule.
Lee made the remarks at the Political Affairs Committee's national audit of the FSS. People Power Party lawmaker Park Dae-chul noted that ETF listings normally go through two stages — a preliminary review by the Korea Exchange followed by an FSS review — but that in the case of single-stock leveraged ETFs, the FSS had conducted its review before the exchange's preliminary review was complete. Asked whether such a sequence had ever occurred before, Lee said, "We checked, and it appears that is the case."
"In mid-April, the Financial Services Commission made a policy announcement about the listing schedule for single-stock leveraged ETFs," Lee said. "There was an aspect where we moved quickly through the review in order to meet that schedule."
Asked whether the FSS had reviewed the exchange's preliminary findings during its own review, Lee said, "That is something we would need to verify, but my understanding is that there were no particular issues."
The FSC announced May 27 as the launch date for single-stock leveraged ETFs, when 16 such products tied to Samsung Electronics and SK hynix were listed.
At the time, some in the opposition raised concerns that the products had been rushed to market to boost the stock market ahead of the June 3 local elections, which were a week away.
Lee had drawn attention earlier with remarks at a press briefing on June 22, in which he said of the decision to introduce leveraged products: "I had many concerns given that the stock market had risen considerably, and I have since had many regrets — wondering whether I should have just lain down and blocked it."
After the comments sparked controversy, Lee clarified that his remarks were made in the context of investor protection. "Single-stock leveraged ETFs are not funds that track an index. They are closer to individual stocks with no diversification effect, and at the time there was volatility in the underlying shares," he said. "The intent was investor protection — there was no other context to the remarks."
jshan@heraldcorp.com
