[Exclusive] Retail Traders Hit by Samsung, SK Hynix Leverage ETF Curbs as Foreign HFT Holds Up

$21,700 Deposit Requirement Chokes Off Trading

Foreign Ultrafast Trading Largely Intact

South Korea’s curbs on single-stock leveraged exchange-traded funds effectively forced retail investors out of the market, while much of the trading by foreign high-frequency trading firms remained intact.

According to Park Dae-chul, a lawmaker from the ruling People Power Party, commissions collected from retail investors by eight brokerages — Korea Investment & Securities, Kiwoom Securities, Mirae Asset Securities, Samsung Securities, NH Investment & Securities, Daishin Securities, Hana Securities and Meritz Securities — from single-stock leveraged ETF trading plunged 93% to 2.02 billion won ($1.5 million) in August from 30.47 billion won ($22.1 million) in July.

The drop followed a July 31 rule by financial authorities requiring investors in single-stock leveraged ETFs and exchange-traded notes, or ETNs, to post a minimum cash deposit of 30 million won ($21,700).

By contrast, commissions those brokerages collected from institutions and foreign high-frequency trading firms fell only 42.1% over the same period, to 6.43 billion won ($4.7 million) from 11.11 billion won ($8.1 million). That suggests professional HFT trading was largely preserved even as retail investors were pushed out.

Shim Woo-il, Hankyung.com reporter, goodwill@hankyung.com