South Korea Mandates Mock Trading for Retail Investors in Leveraged ETFs

South Korea's financial regulators have announced new requirements for retail investors looking to trade leveraged products, set to take effect on August 19, 2026. The Financial Services Commission and the Korea Exchange have determined that first-time investors must complete a mandatory mock trading course, pass educational requirements, and deposit a minimum of 30 million won (approximately $21,000) in cash before executing real trades.

Details of the New Requirements

• Investors must engage in at least five trading days of simulated trading on the KRX platform, with each session lasting a minimum of one hour.
• Additionally, a three-hour educational training session is required, focusing on the mechanics of leveraged products and the potential risks involved, particularly the negative compounding effects.

The regulatory move comes in response to a surge in retail investment in leveraged ETFs, which saw significant trading volumes and assets under management shortly after their launch in May 2026. However, as the Kospi index corrected from its highs, many retail investors faced substantial losses, prompting regulators to prioritize education over outright prohibition.

The educational component aims to address a knowledge gap among retail investors, many of whom may not fully understand how daily rebalancing in leveraged ETFs works. The cash deposit requirement is designed to raise the stakes for participation, thereby deterring casual speculation while remaining accessible to serious investors.