Key Takeaways:
South Korea's stock exchange shelved plans for single-stock weekly options days before their scheduled debut, as regulators recoiled from a 10% crash in the KOSPI index that exposed the risks of short-dated leveraged derivatives.
The Korea Exchange postponed the June 29 launch of weekly options on Samsung Electronics Co., SK Hynix Inc., Hyundai Motor Co. and LG Energy Solution Ltd., people familiar with the matter said, after the KOSPI index plunged about 10% in a single session from a record high. A KRX spokesperson said no final decision had been made, with discussions ongoing.
"The crash forced regulators to confront what they had been warning about for weeks — that short-dated leveraged products amplify retail losses during violent reversals," said a person familiar with the exchange's deliberations, asking not to be named because the talks are private.
The KOSPI had been one of the world's best-performing major indexes this year before Monday's rout erased hundreds of billions in market value. The selloff followed a period of rapid valuation expansion fueled by retail margin trading, which financial authorities had already flagged as a concern. Earlier in May, regulators publicly expressed regret over the launch of single-stock leveraged ETFs, warning their negative impact was "expanding rapidly."
The delay threatens to slow South Korea's broader push to modernize its derivatives market and attract foreign capital. The exchange currently lists 64 single-stock monthly options, and the weekly contracts were seen as a critical upgrade to compete with Hong Kong, which introduced similar products in 2024, and the U.S., where zero-days-to-expiry options now account for more than half of S&P 500 options volume.
South Korea's relationship with derivatives speculation has been fraught for two decades. The KOSPI 200 index options contract was the world's most actively traded derivatives product in the 2000s, drawing retail investors with low barriers to entry. But after repeated episodes of speculative excess and volatility, regulators imposed a series of restrictions in the early 2010s — including higher margin requirements and position limits — that dramatically reduced trading volumes.
Those restrictions were gradually eased in recent years as Seoul sought to attract more foreign institutional participation and deepen its capital markets. The weekly options initiative was part of that reopening, designed to give investors more granular hedging tools in a market where monthly expiries had become the standard.
The postponement leaves the four underlying stocks — among the most heavily traded names on the KOSPI — without the short-dated hedging instruments that traders had expected by midyear. For Samsung Electronics and SK Hynix, which together account for roughly a third of the KOSPI's weighting, the absence of weekly options may dampen trading volumes and increase hedging costs for institutional investors.
The KRX has not announced a revised timeline. Any resumption of the plan will likely depend on market stabilization and a clearer regulatory framework for short-dated derivatives — conditions that, after Monday's crash, may take weeks or months to materialize.
This article is for informational purposes only and does not constitute investment advice.
