Lee Chan-jin “Single-stock ETF, screening is conducted quickly to meet the listing schedule” (comprehensive)

(Seoul = Yonhap News) Reporters Bae Young-kyung, Kang Soo-ryun, and Kang Ryu-na = Financial Supervisory Service Commissioner Lee Chan-jin said on the 19th that the review of single-stock leveraged exchange-traded funds (ETFs) was conducted quickly in order to meet the listing schedule.

Director Lee responded as follows to a related question from People Power Party lawmaker Park Dae-chul at the National Assembly's Political Affairs Committee audit of the Financial Supervisory Service and others this morning.

Rep. Park said that usually, when an ETF is listed, it goes through two stages, including a preliminary review by the Korea Exchange and a review by the Financial Supervisory Service. In the case of a single-stock leveraged ETF, the Financial Supervisory Service reviewed it even before the preliminary review of the exchange was completed. When asked if this was the first time such a case occurred, Director Lee responded, "We checked and it seems so."

Then, when Rep. Park asked for an explanation as to the reason, Director Lee said, "The Financial Services Commission announced a schedule for listing (single-stock leveraged ETF) as a policy in mid-April," and added, "There is a part where the review was expedited to meet that schedule."

When asked whether he had checked the exchange's preliminary review results during the Financial Supervisory Service's review, he replied, "We need to check that, but I don't know that there were any problems."

The single-stock leveraged ETF launch date announced by the Financial Services Commission was May 27, and at that time, 16 single-stock leveraged ETF products were listed.

Opposition party members continued to point out Director Lee's remarks at a regular press conference last June, regarding the launch of a single-stock leveraged product, saying, "Should we have lied down and blocked it?"

When Representative Han Chang-min of the Social Democratic Party pointed out that the Financial Supervisory Service, as a supervisory body, should have checked the matter in advance through its system, rather than making such remarks, Director Lee said, "I will make efforts to enforce (the Financial Supervisory Service's) position at the supervisory and execution site to prevent (similar) situations from recurring in the future."

When People Power Party lawmaker Kim Jae-seop also pointed out why he did not lie down, Director Lee responded, “The policy had already been announced and confirmed.” This is interpreted to mean that it was realistically difficult to stop it as it was about to be launched.

Director Lee then explained, “The reason (the statement) was made on June 22nd was because investors were expected to suffer significant damage,” adding, “I sent out a strong message to sound the alarm of investors.”

In addition, in response to Rep. Kim's question about whether the KOSPI plunge was due to a single-stock leveraged product, Director Lee admitted, "I think (the launch of the product) was partly responsible."

When asked to evaluate the announcement of securing financial market stability in the work plan last February, he responded, "My heart is heavy."

Director Lee dismissed the controversy over conflict of interest related to his son's employment at Mirae Asset Global Investments, saying, "It has nothing to do with the job."

People Power Party lawmaker Park Seong-hoon asked whether Director Lee reported conflict of interest avoidance of duties and personal interests to 14 organizations, including Mirae Asset Global Investments, immediately after taking office, and Director Lee admitted this.

Rep. Park pointed out, “Approving to revise the bylaws so that the company where my son works can generate enormous profits is a clear self-interest and a violation of the Conflict of Interest Prevention Act.”

Director Lee responded, “I am not a private stakeholder in relation to the enforcement regulations and have no job-related relationship at all.”

He went on to explain, “The reason for the avoidance was that there seemed to be many issues such as sanctions on asset management companies, so we avoided it proactively to eliminate the possibility of misunderstanding.”

In response to Representative Park's request to reveal the key person in the introduction of the single-stock leverage product, Director Lee responded, "I don't think it is appropriate to talk about it," and "It was a matter decided through consultation with the government and authorities, so it would be difficult to say that a specific person played a key role."