FSS gave asset managers hours to pull ETF ads

South Korea’s Financial Supervisory Service ordered asset managers to halt advertising for single-stock leveraged exchange-traded funds with only a few hours’ notice, an unusually abrupt directive that left promotional campaigns in place over the weekend, industry sources said Monday.

The FSS sent the notice late Thursday after the Financial Services Commission, the FSS and the Korea Exchange jointly unveiled measures to tighten oversight of the products. The notice instructed firms to “immediately suspend all advertising and event-based marketing activities” for domestically listed single-stock leveraged and inverse ETFs across all media.

The measures, introduced just 50 days after the products were launched, require investors to deposit at least 30 million won ($20,291) in cash before trading, purchase the products in minimum lots of 20 shares, and complete three hours of investor education, up from two previously. Authorities also suspended approvals for new single-stock leveraged ETFs until market conditions stabilized and banned advertising for existing products.

Because the notice was distributed after the policy announcement and after many employees had already left work, promotional campaigns by major asset managers remained both online and offline throughout the weekend, according to sources.

Samsung Asset Management’s YouTube channel continued to feature videos promoting its Samsung Electronics and SK hynix single-stock leveraged ETFs, including shorts carrying the slogan “Twice as powerful.” Mirae Asset Global Investments also kept videos online promoting its semiconductor-focused leveraged ETFs with the tagline “For those serious about semiconductors.” Some firms likewise left other online promotional content in place.

“Advertising buses promoting Mirae Asset’s single-stock leveraged ETFs continued operating throughout the weekend, while Korea Investment Management also kept promotional shorts on YouTube after the authorities’ announcement,” an asset management official said. “The FSS notice arrived after employees had already left work, creating a gap between the announcement and implementation.”

Another industry official said some firms removed their advertisements only after receiving follow-up calls from the FSS on Monday.

“The regulator’s follow-up came too late,” the official said. “If the measures were truly urgent, firms should have been instructed to remove their advertisements before the policy announcement.”

Industry officials said the timing was unusual, noting that authorities had circulated guidance urging firms to refrain from promotional activities well before the SpaceX public offering.

Asset managers had aggressively marketed the products before and after their May launch, drawing criticism that the campaigns encouraged speculative trading. Although the FSS later formed a task force to monitor potentially exaggerated advertising and repeatedly urged firms to exercise restraint, many continued promoting the products through corporate YouTube channels and financial influencers.

An FSS official defended the timing, saying the government’s briefing on the ETF measures did not conclude until after 5 p.m.

“We could have waited until Monday, but because we were concerned advertisements would continue over the weekend, we decided to send the notice immediately,” the official said.