Applying the brakes on fervent retail investors: South Korea tightens regulations on leveraged ETFs, requiring a 5-day simulation trading period before leveraged trading of individual stocks.

South Korea will require new investors in single stock leveraged ETFs to complete simulated trading exercises, further tightening regulatory rules on these high-risk products that amplify market volatility. The Financial Services Commission (FSC) of South Korea stated in a release that new investors in single stock leveraged ETFs must complete at least 5 days and a total of at least 5 hours of simulated trading. This new regulation will take effect on August 19, applying to both domestic and overseas investors. Following a recent round of sharp declines that resulted in billions of dollars in losses for investors, this move is the latest measure by regulators to curb retail access to leveraged ETFs. Previously, the authorities had raised the minimum cash margin for such transactions to 30 million won (approximately $21,000) and extended the mandatory online training time for new investors in single stock leveraged products to 3 hours. Before the introduction of these regulatory restrictions, there had been criticism that leveraged products linked to chip giants Samsung Electronics and SK Hynix had amplified the volatility of the benchmark KOSPI Index. Since the cash margin requirements were increased on July 31, trading volume in single stock leveraged ETFs has decreased. According to data from financial regulators, the trading value of such products on August 11 was only 700 billion won, down from a peak of 12.4 trillion won on July 30. The Korea Stock Exchange's website will offer new simulated trading courses for free. Individuals seeking to engage in derivative trading or short selling of stocks also face similar compliance requirements.