Korea Raises Bar for Leveraged ETF Trading With Mandatory Practice - Seoul Economic Daily Featured News from South Korea

Korea Raises Bar for Leveraged ETF Trading With Mandatory Practice

South Korea is introducing a mandatory practice-trading requirement for new investors in single-stock leveraged and inverse exchange-traded funds (ETFs) and exchange-traded notes (ETNs). The measure follows a tightening of minimum deposit requirements last month and is aimed at strengthening investor protection given the products' high volatility. Starting on the 19th of this month, first-time individual investors in domestic and overseas single-stock leveraged and inverse products will be required to complete practice trading, according to the financial investment industry on the 11th. New investors must conduct practice trading on the Korea Exchange practice-trading system for at least five trading days. They must complete at least one hour on each trading day, for a total of at least five hours, and then register their completion records with a participating brokerage before they can trade the actual products. Individual investors who have traded domestic or overseas single-stock leveraged products before the 18th of this month, the day before the rule takes effect, are exempt from the practice-trading requirement. Professional investors, corporations and foreign investors are also excluded. The measure is a follow-up to additional regulations on single-stock leveraged products that the government announced through a market situation review meeting, known as the F4 meeting, on the 29th of last month. At the time, financial authorities presented four measures: setting per-account limits on single-stock leveraged investments, raising trading costs through steps such as an excessive-quote fee, requiring investors to complete practice trading in advance, and introducing emergency market-stabilization measures. The industry sees the move as a way to make investors experience firsthand the high volatility and loss risk of the products before actual trading. Individual investors currently must complete the exchange's advance education and practice-trading process to participate in the exchange-traded derivatives market. Authorities plan to apply the same investor-protection safeguards to single-stock leveraged products, raising the entry barrier further. Brokerages are also guiding clients on the conditions for completing practice trading and the registration procedures ahead of the rule's introduction. After finishing practice trading, investors must register their completion records, including an exchange ID and authentication key, with their brokerage. Depending on the brokerage, registration can be done through a mobile trading system (MTS), a home trading system (HTS), a customer center or a branch office. Earlier, from the 31st of last month, minimum deposit requirements for single-stock leveraged products were also tightened. The minimum deposit was raised to 30 million won ($21,600) in cash from 10 million won, and substitute securities such as stocks were excluded from eligibility....

Lee Backs Rules to Clarify Yellow Envelope Law, Orders Labor Ministry Review - Seoul Economic Daily Featured News from South Korea

Lee Backs Rules to Clarify Yellow Envelope Law, Orders Labor Ministry Review

politics

President Lee Jae-myung on the 11th ordered the Ministry of Employment and Labor to actively review setting clearer standards under the revised "Yellow Envelope Law," an amendment to the Trade Union Act. "There have been calls to spell out standards for the cases that are clear-cut, and that argument has some merit, so review it seriously," Lee said. His remarks amounted to a rebuke of the labor ministry, which has been reluctant to enact an enforcement decree defining matters such as the scope of labor disputes. Employment and Labor Minister Kim Young-hoon replied that the ministry would "review it more actively." Speaking at a Cabinet meeting he chaired at the Government Complex in Sejong that day, Lee said: "From what I read in the news, someone said it should be made clear, with examples, whether something falls under a dispute covered by the Yellow Envelope Law, and there was criticism that the rules simply aren't being written." Kim explained that the ministry's position was that the matter should not be handled through an enforcement decree, adding, "We have already issued everything through administrative interpretation." Lee responded that administrative interpretation and setting standards defined by law are different. "There is a difference between the labor ministry saying in a ministerial ordinance that 'this case does not apply' and saying 'the labor ministry's view is that this is the correct interpretation,'" he said. "In other words, an interpretation and a directive are different. An interpretation is only an opinion," he reiterated. Kim said he would "review it actively" but noted that "there could be criticism because the law contains no provision delegating this authority." Lee again stressed that "setting the details needed to enforce a law is an executive power granted by the Constitution." He added, "It is not that you cannot do it without delegation from the law; you can do it within the scope that does not conflict with the law and within the scope necessary to enforce that law." He continued, "For example, if it is deemed to have exceeded that authority, it will be ruled invalid, and if not, it is all valid. So saying 'we can't set it because it isn't in the law' is not the case." Lee added: "Because we rely too much on the National Assembly, the Assembly is overloaded, and because everyone tries to amend things through legislation when they could be handled through enforcement decrees, enforcement rules or enforcement guidelines, the number of laws the Assembly has to revise exceeds 10,000. That way nothing gets done, so legislate only what is truly necessary — and the same goes for other ministries." At a Cabinet meeting on the 21st of last month, Lee had similarly said: "The Yellow Envelope Law expanded the scope of labor disputes, but aren't disputes breaking out on the ground over the standards? Whether something applies or not has become a social flashpoint, and conflicts are erupting everywhere." He directed the labor ministry to "sort out the guidelines corresponding to presidential decrees or enforcement rules before matters go to court."...

Trump Curbs Rates and Fuel Prices in Stopgap Push Before Midterms

# - Seoul Economic Daily Featured News from South Korea

Trump Curbs Rates and Fuel Prices in Stopgap Push Before Midterms #

international

NEW YORK — With the midterm elections on November 3 local time now less than three months away, votes that will determine the momentum of President Donald Trump's agenda, the U.S. administration has been rolling out a series of unprecedented economic measures. As Treasury yields climbed on inflation fears tied to the war with Iran and the artificial intelligence investment race, the administration has begun weighing a reduction in the volume of long-term debt sales themselves. It is a stopgap aimed at easing the federal government's interest burden after the national debt topped $40 trillion. Lowering long-term yields would in turn affect other interest rates across financial markets tied to political votes, including mortgages and loans to Big Tech companies. The U.S. Treasury's recent, unusual intervention in the yen-dollar market alongside Japan's Ministry of Finance was also aimed largely at holding down Treasury yields by blocking an unwinding of the yen carry trade — the resale of overseas assets bought with cheap yen. In that process, the Treasury openly demanded an expansion of the repurchase agreement (repo) facility for foreign monetary authorities (FIMA), a power that belongs to the Federal Reserve, drawing controversy. The Trump administration went further, granting another waiver of the Jones Act past the midterm elections after Middle East war pushed U.S. gasoline prices higher again. The Jones Act grants shipping rights between domestic ports only to U.S.-flagged vessels. That, too, is the longest such measure in the 106 years since the law was introduced in 1920. On Wall Street, there is concern that the Trump administration is countering the side effects of war-driven inflation appearing across the board with nothing more than stopgap fixes aimed at the election. U.S. Treasury Signals Smaller Long-Term Debt Sales as Trump Administration Fights to Hold Down Rates Before Midterms The U.S. Treasury released its quarterly debt issuance plan on the 5th and signaled that it may reduce long-term debt auctions later on. In it, the Treasury kept the existing wording that, "based on the outlook for borrowing needs," it expects to keep the sizes of coupon-bearing note and floating-rate note (FRN) auctions steady "for at least the next several quarters." That phrasing had been inserted continuously since January 2024, during the tenure of former Treasury Secretary Janet Yellen. At the same time, the Treasury said it "continues to evaluate" the possibility of "changes" to the sizes of nominal coupon and floating-rate note auctions, "focusing on structural demand trends and potential costs and risks." The word that had previously read "increases" was replaced with changes. The market read this as a message from the Treasury that it could scale back coupon-bearing debt sales within a few quarters, even amid the chronic federal budget deficit. On the 9th, Bloomberg also reported that Treasury Secretary Scott Bessent is sending signals to the market that he wants to prevent a rise in U.S. long-term government bond yields. Bloomberg said this perception has spread among Wall Street dealers and market strategists, and pointed to the signal of smaller long-term debt sales, the intervention to prop up the yen, and support for the Fed under Chairman Kevin Warsh as indicators backing this view. On the joint intervention by U.S. and Japanese foreign-exchange authorities to prop up the yen, which began on the 30th of last month, Bloomberg described it as "a move to reduce the risk that Japan dumps large amounts of U.S. Treasuries to raise the dollars it needs to defend its own currency." The two countries' foreign-exchange authorities have jointly intervened in the market by selling dollars and buying yen to prop up the yen's value. It is the first time in 28 years, since the East Asian economic crisis in 1998, that the United States and Japan have cooperated to strengthen the yen by directly buying the currency. During the 2011 Great East Japan Earthquake, the United States did the opposite, jointly intervening with Japan by selling yen in large amounts to ease the yen's excessive strength. Bloomberg also interpreted Bessent's recent defense of Warsh as an act aimed at pushing long-term bond yields lower. Wall Street investors dumped bonds on the 29th of last month after Warsh, in a news conference immediately following the Federal Open Market Committee (FOMC) meeting, stressed a commitment to price stability only in words while holding the benchmark rate steady in action. Bessent defended Warsh on CNBC on the 5th, saying the market "needs to detox from" the Fed's comments on monetary policy. The Trump administration is fighting so hard to defend U.S. Treasury yields, and long-term yields in particular, because the issue — combined with Middle East-driven inflation — could become a political liability in the midterm elections. The U.S. federal government's national debt, which stood at $36 trillion (about 51 quadrillion won) in late November 2024, just before Trump's return to power, has swelled to $40.07 trillion (about 56.8 quadrillion won) this month. It has ballooned like a snowball, passing $37 trillion in July last year, $38 trillion in October the same year, and $39 trillion in March this year in succession. With the interest paid each year on the national debt alone exceeding $1 trillion (about 1,420 trillion won), the Trump administration's fiscal policy is under heavy constraint. On top of that, the yen's value, which has fallen to its worst level since 1986, has become a further blow to the Trump administration. From the U.S. perspective, if the yen weakens too severely, Japan could later raise interest rates sharply, exposing the U.S. to a yen carry trade shock. An unwinding of the yen carry trade would reduce demand for U.S. Treasuries, pushing bond prices down and yields up. National Debt Tops $40 Trillion Amid Weak Yen and Rising Mideast, AI-Driven Inflation — Ripple Effects on Mortgages and Big Tech Investment In the same vein, a scenario in which the Fed raises the benchmark rate right away in the second half of this year to meet its 2% inflation target could hardly help Trump's midterm strategy. Even the reciprocal tariffs, which had eased part of the budget deficit, failed to take effect after the Supreme Court struck them down on February 20 and the resulting tax refunds followed. Crucially, the war against Iran that began on February 28 to turn the tide has been adrift, producing only massive defense spending, a rise in international oil prices, and a surge in inflation. Indeed, the yield on the 30-year U.S. Treasury note climbed to 5.28% on the 31st of last month, its highest level in 19 years since July 2007. The 30-year Treasury yield jumped to 5.25% on the 10th as well, on disappointment over the deadlock in negotiations over the Strait of Hormuz. In principle, the 30-year Treasury yield treats 5% as a psychological line of resistance. In particular, when the 30-year Treasury yield rises, mortgage rates that move in reference to it climb along with it, dealing Trump a politically fatal blow ahead of the midterms. According to Freddie Mac, the U.S. state-backed mortgage lender, the average rate on the 30-year fixed-rate mortgage was 6.69% on the 6th, up 0.03 percentage point from a week earlier. That was the highest level in a year, since July 31 last year. The U.S. mortgage rate had fallen to 5.98% at the end of February, just before the war broke out, and has been on an upward curve since the conflict began. If a rise in long-term Treasury yields spreads more quickly to the private sector, it would also sharply rattle the corporate bond market for AI infrastructure, whose issuance is projected to reach as much as $570 billion (about 810 trillion won) this year alone. If Big Tech companies' interest burdens surge, related investment will inevitably contract. Given that recent U.S. growth has rested purely on AI investment, this is a matter that could hurt both the economy and the stock market as a whole. Though the cornered Trump administration is artificially pressing down on Treasury yields, questions remain over how effective it will be. According to the minutes of the Treasury Borrowing Advisory Committee (TBAC) meeting on the 5th, if current debt auction sizes are maintained, the federal government could face a funding shortfall of $1.45 trillion in fiscal years 2027 and 2028. #...

◆ WAN-IFRA Gold

Best AI-driven News Product, Format or Strategy

AI LENS

Technology

View More →

AI KEY

Preview
Korean Corporate Intelligence HubKOSPI · KOSDAQ · 12 sectors

A live, cap-weighted view of every KOSPI and KOSDAQ sector, with same-day Korean reporting distilled by company — built for foreign investors, correspondents and analysts who need to scan Korea before the next session.

Korea Company Atlas

Preview
Market Ontology · The Feedback LoopKFTC 2025 · 92 groups · 121,954 articles

An English ontology of the Korean market — how companies, the media, the government and the National Assembly move each other in a loop. Korea's named controlling persons and designated business groups are a mechanism, not a risk to be priced blind.

Newsletter

Get the latest business news and analysis delivered to your inbox every morning.