South Korea will require new investors in single-stock leveraged exchange-traded funds to undergo mock trading exercises, further tightening rules on highly risky products that have amplified market volatility.

The new requirement, announced by the Financial Services Commission, aims to protect retail investors from the complex mechanics and amplified risks associated with leveraged ETFs that track individual stocks rather than broad indices.

Market participants have expressed mixed reactions, with some supporting enhanced investor education while others worry about reduced liquidity for these products. The rule follows similar measures already in place for other high-risk financial instruments in the country.

The initiative reflects South Korea's broader push to balance financial innovation with investor protection, particularly after periods of heightened market turbulence linked to leveraged fund activity.