The government will require investors to hold at least 30 million won ($20,300) in cash as a basic deposit to trade single-stock leverage products, with the measure taking effect Friday — three days ahead of the originally planned date.
The Financial Services Commission said Friday it would implement the tightened basic deposit requirement Friday rather than in August, citing the need to stabilize demand quickly.
Earlier, the FSC announced plans to raise the basic deposit requirement from 10 million won to 30 million won in cash only, while excluding substitute securities — such as shares, ETFs and bonds, which had previously been counted at up to 70 percent of their market value — from the deposit calculation.
The measure had originally been set to take effect in early August, but the FSC said the implementation date was moved up after the industry actively stepped forward to support an earlier rollout.
President Lee Jae Myung directed officials at a Cabinet meeting Tuesday to act swiftly on supplementary measures for single-stock leverage products. "Shouldn't this be done immediately or early, rather than waiting a long time?" he said. "Move boldly and quickly to take the necessary response measures."
Starting Friday, investors must hold more than 30 million won in cash to make new investments in or additional purchases of single-stock leverage products. The requirement applies equally to products listed overseas.
Investors will also be barred from reducing their basic deposit below the required level after a set period following a transaction.
The FSC will also refine the rules on what counts toward the cash basic deposit requirement. Proceeds from selling substitute securities will not be recognized as part of the basic deposit until the cash has actually been credited to the account. The measure is intended to prevent excessive churning, such as selling securities and immediately repurchasing them on the same day.
Loan amounts borrowed against sale proceeds will also be excluded from the basic deposit calculation.
Measures to strengthen management of price deviation rates are set to take effect Aug. 19, following revision of exchange rules and enforcement regulations.
The FSC is also pushing to bring forward the planned expansion of the minimum trading unit for single-stock products to 20 shares per transaction, ahead of the original November timeline.
dlcw@heraldcorp.com
