South Korea announced a temporary halt on new listings of single-stock leveraged ETFs to curb market volatility after a surge in popularity of funds linked to Samsung Electronics Co. and SK Hynix Inc. The decision follows concerns that these products, which use derivatives to amplify returns, can magnify market swings during turbulent periods. Regulators note that while existing ETFs will continue to trade, no new products that use a single underlying stock and a leverage ratio will be approved until a comprehensive review is completed.

The move aligns South Korea with a growing global trend of tightening rules around leveraged and inverse funds. Market participants warn that the sudden halt may affect institutional investors who rely on these instruments for hedging or speculative strategies. The ban is expected to reduce the risk of rapid price swings that could spill over into broader market indices.

Regulators will assess the impact of the pause on the capital markets, weighing the benefits of protecting investors against the potential dampening of market depth. The decision is seen as a precautionary measure aimed at maintaining orderly trading conditions while the authorities review the framework governing leveraged products.