South Korean Retail Traders Pull Back From Chip‑Focused Leveraged ETFs Amid New Mock‑Trading Rule

A wave of South Korean day traders is retreating from leveraged ETFs that promise double the daily gains of Samsung Electronics and SK Hynix, the two dominant chipmakers in the country’s $4.3 trillion market. The products, launched in May to attract retail capital, have seen trading volumes fall to just 4 % of their June highs and are now experiencing their first monthly outflow.

The decline follows a string of regulatory measures designed to temper speculative activity. The latest, which took effect on August 19, requires investors to complete a five‑day simulated trading program. The program, available only on Windows PCs, demands at least an hour of daily practice with virtual cash before any real trades can be executed. Many retail participants find the requirement cumbersome and are opting out.

"It’s a hassle to download the software and keep a laptop at work," said Kim Jung‑hoon, a 41‑year‑old resident of Gyeonggi province. "The rule feels too restrictive for everyday traders.")

The mock‑trading exercise is part of a broader crackdown that began in July, which also raised the minimum deposit for these ETFs. The single‑stock funds had quickly become a political flashpoint, as their combined turnover with the underlying chip stocks accounted for over 80 % of the market’s total volume and contributed to extreme price swings.

Under the new rules, virtual traders receive a deposit of 100 million won (about $72,872) to experience the risks of leveraged trading before committing real money. The goal is to curb the volatility that has plagued the market in recent months.

With the regulatory environment tightening, many day traders are choosing to stay away from the high‑leverage chip ETFs, signaling a shift in retail sentiment toward more conservative investment strategies.