Risk Amplified: South Korea's Crackdown on High Risk ETFs The recent proposals to tighten regulations on high risk exchange traded funds (ETFs) in South Korea are a welcome relief for investors who have suffered steep losses from these products.
The regulator plans to curb the leverage ratio of single stock ETFs and raise the minimum investment requirement, measures aimed at mitigating the risk that these instruments pose to retail investors.
High risk ETFs amplify market volatility by allowing investors to magnify their exposure to a company's share price without owning the underlying stock.