South Korea is set to announce measures soon regarding leveraged ETFs linked to shares of Samsung Electronics and SK Hynix, which have led to a sharp increase in market volatility.

Bloomberg News quoted Financial Services Commission Chairman Lee Eog-won as saying that the commission is in intensive discussions with the Ministry of Finance, the Bank of Korea, and the Financial Supervisory Service regarding measures to protect investors and ensure market stability.

Bloomberg noted that the funds, launched just two months ago in the South Korean market, have doubled the daily movements of the underlying stocks. Many market participants have blamed them for exacerbating volatility due to the nature of their daily rebalancing required to maintain promised return ratios.

The benchmark Kospi index of South Korean stocks rose more than 100% over the year to a record high in June, but has since collapsed.

Proposed measures to ease the pressure include raising the minimum deposit required to invest in these leveraged products from the current 10 million won ($6,735), and limiting the impact of daily rebalancing – which largely occurs near market close – on the market by spreading rebalancing activity throughout the session.

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