Authorities push to introduce emergency stock market powers…Hong Kong's 'variable leverage' under review
Hong Kong-style regulation shows clear 'light and shadow'…concerns over investor inconvenience and swollen powers for asset managers
Korean and Hong Kong regulation have different roots…"instead of patchwork regulation, put the framework in place first"
The financial authorities keep raising the level of regulation on single-stock leverage ETFs. Following last month's increase in the basic deposit, they have hinted at the possibility of invoking 'emergency stock market powers' centered on a 'Hong Kong-style leverage multiple adjustment', stirring investors and the industry.
According to the financial investment industry on the 7th, domestic asset managers are closely watching the 'variable leverage' framework recently introduced by Hong Kong's Securities and Futures Commission (SFC). This is because the financial authorities are reviewing a plan, referring to the Hong Kong case, to lower leverage multiples when the stock market swings abruptly. The government and the ruling party are now moving to amend the Capital Markets Act to legislate 'emergency stock market powers' including the leverage multiple adjustment plan.
From the 3rd, the SFC introduced a system that autonomously adjusts the daily target L&I multiple from a maximum of 2 times down to a minimum of 1.1 times, in order to address the limits of managing 'leverage and inverse (L&I) products' and shocks to the spot market. In Hong Kong, single-stock products such as the SK Hynix 2x leverage ETF plunged 75~80% from their highs in just one month amid a correction in semiconductor stocks, maximizing market volatility.
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https://www.investchosun.com/m/article.html?contid=2026080780107
