FSC Chair Lee Eok-won Apologizes Over Single-Stock Leveraged ETF Losses, Says Launch Was FSC Decision

Lee Eok-won, chair of the Financial Services Commission, apologized for investor losses and concerns over market volatility that surfaced after the introduction of single-stock leveraged exchange-traded funds. He said, however, that the products were introduced based on the commission’s own judgment, not on instructions from the Blue House.

Testifying at a National Assembly Political Affairs Committee audit on Oct. 8, Lee said he was sorry that the policy had ultimately caused losses, concern and harm, regardless of the need for the measure. He added that the commission would continue to closely monitor the situation.

Asked by People Power Party lawmaker Park Joon-tae about how the products were introduced, Lee said they were not launched at the direction of the Blue House. He added that the legal basis was a revision to an enforcement decree under the FSC’s authority, and that the decision was made after hearing a range of views. When other lawmakers raised the same allegation, he maintained that the matter was decided by the FSC.

Lee also said there had been steady calls to allow in South Korea products already traded overseas. He said there had been repeated questions about why investors could buy single-stock leveraged ETFs abroad but not in the domestic market.

Lee disputed an estimate by a foreign investment bank that retail investors suffered losses of about $39 billion. He said the material was not an official report by the firm, but an informal market commentary written by its trading desk, and argued that its contents were not accurate.