Lee Chan-jin, head of the Financial Supervisory Service, said he regrets not blocking leveraged exchange-traded funds earlier [1].
This admission highlights a growing tension between financial innovation and investor protection in South Korea. Leveraged ETFs can amplify gains but also accelerate losses, making them a focal point for regulators concerned about retail investor stability.
Speaking on a YTN News START broadcast, Lee said that these financial instruments should have been stopped even if it meant “lying down” [1]. The phrase suggests a willingness to have taken extreme or desperate measures to prevent their implementation [1].
Lee said he believes leveraged ETFs contributed to market volatility [1]. According to the FSS head, prohibiting these funds would have been a necessary step to protect investors from the inherent risks of amplified market exposure [1].
The Financial Supervisory Service is tasked with overseeing financial institutions to ensure stability and fair practices. By publicly acknowledging this regret, Lee signals a shift in how the agency views the balance between market liquidity and the risk of systemic volatility [1].
While leveraged ETFs remain popular among some traders for their ability to multiply returns, the FSS head suggests that the cost of allowing them was too high. He said the priority should have been the prevention of volatility, regardless of the professional or political cost involved in blocking the products [1].
““leverage ETF should have been stopped even if I had to lie down””
Lee Chan-jin's comments indicate a retrospective shift toward a more interventionist regulatory stance in South Korea. By framing the failure to block leveraged ETFs as a significant error, the FSS is signaling that investor protection and the reduction of market volatility may now take precedence over the availability of high-risk, high-reward financial products.
