South Korea Mandates Trading Courses for Leveraged ETF Investors

New South Korea leveraged ETF rules require investors to complete simulated-trading courses before buying leveraged exchange-traded funds as regulators seek to curb speculative activity.

The measures particularly affect products linked to major technology stocks including Samsung Electronics and SK Hynix.

Trading volume in the affected products has fallen to around 4% of its June peak, while the ETFs recorded USD1bn of outflows in August, putting them on course for their first monthly net withdrawal.

Under the tightened requirements, investors must complete a five-day programme using virtual funds before gaining access to leveraged products.

Participants must download a Windows-only application and spend at least one hour each day learning the mechanics and risks of leveraged investment strategies.

Analysts expect withdrawals to continue in the near term as additional regulatory hurdles and weaker speculative demand reduce trading activity in the products.