South Korea considers easing high-leverage ETP ban: stock market up 92% still struggles to win retail investors' hearts

[Crypto World] Korea's securities exchanges have recently been in close communication with financial regulators, planning to relax restrictions on high-leverage ETP products. The underlying logic is quite interesting—last year, the Kospi index rose 92%, hitting a record high, but retail investors did not flock back to the local market.

Exchange executives revealed that they are studying gradual adjustments to the existing policy framework. Currently, bans cover single-stock leveraged ETFs and funds that provide 3x or more leverage exposure to the index. These are all high-risk trading instruments.

The reality Korea faces is quite sobering: even though the local stock market is performing explosively, investors' money continues to flow steadily into the US stock market. Regulatory analysis suggests that currency depreciation is one of the key factors, and ongoing capital outflows have also intensified this trend. In plain terms, retail investors are more optimistic about opportunities in the US market. Relaxing leverage restrictions seems somewhat like an attempt to boost trading activity and attract renewed interest.

This move reflects Korea's financial market grappling with a tricky issue: how to compete for the attention and funds of local investors amid increasing global capital flows.