[Edaily kyoungeun kim Reporter Park Min] Controversy surrounding single-stock leverage products for Samsung Electronics and SK Hynix is escalating ahead of next month’s parliamentary audit. While foreign investors’ high-frequency trading (HFT) has long been identified as the primary culprit behind increased market volatility, data shows that commission revenue from foreign HFT at major domestic securities firms surged around the time these products were launched. In effect, this confirms—albeit indirectly through securities firms’ commission revenue—that foreign high-frequency trading (HFT) was involved in these single-stock leverage products during this period.

According to data submitted by the Financial Supervisory Service to the office of People Power Party lawmaker Park Dae-chul on the 10th, the combined foreign HFT commission revenue of four securities firms—Korea Investment & Securities, Kiwoom Securities, Daishin Securities, and NH Investment & Securities—surged approximately fivefold over a six-month period. It rose from a monthly average of 3.2 billion won in the second half of last year to exceed 10 billion won for the first time in May following the launch of the leveraged products, peaking at 15.1 billion won in June.
Analysts suggest that the launch of single-stock leveraged ETFs served as the trigger for this surge, as HFT commission revenue continued to rise in tandem with increased volatility in the domestic stock market during the first half of this year.

On July 31, regulations on leverage margin deposits took effect, and as trading volume for single-stock leverage products plummeted, the figure dropped to 6.4 billion won in August—returning to the April level of 7.0 billion won, which was prior to the product’s introduction.
Given the clear correlation between the surge in single-stock leveraged trading and foreign HFT commission revenue, the entire trading ecosystem—extending beyond the asset management firms that decided to introduce the product to the securities firms that brokered the trades via Direct Market Access (DMA) services—is expected to draw attention from political circles.
Although HFT commission rates through domestic securities firms’ DMA services are low—around 1 basis point (0.01%)—for products with high turnover, such as single-stock leveraged ETFs, the massive trading volume offsets the low commission rate and translates into revenue for the securities firms.
In fact, Korea Investment & Securities’ share of ETF trading volume surged from the low 10% range before the launch of leveraged products to 26.7% last June.
According to Rep. Park’s office, Korea Investment & Securities’ HFT commission rates for foreign clients range from 0.53 to 1 bp (1 bp = 0.01 percentage point), depending on transaction amount and trading history, making them the lowest in the industry compared to Kiwoom (0.6–1 bp) and NH (0.7–1.3 bp).
The share of commissions from this product relative to total domestic stock brokerage commissions also tripled in just three months, rising from 2.04% immediately after its launch to 3.87% in June and 6.15% in July, based on data from eight securities firms (Korea Investment, Samsung, Kiwoom, Mirae Asset, NH Investment, Daishin, Hana, and Meritz Securities). For Korea Investment & Securities, 12.17% of its commission revenue from agency trading in July came from this product line alone. The high trading turnover rate is cited as the reason behind the surge in commissions.
As concerns persist in some quarters of the market that the concentration of foreign high-frequency trading (HFT) in the Korean stock market is increasing market volatility, financial authorities are designing regulations aimed at raising the burden of transaction costs. One proposal under discussion is to apply derivatives market regulations—imposing a maximum daily levy of 1 million won on accounts or algorithms that exceed thresholds for excessive quote submissions, amendments, or cancellations. Specific criteria for levies, eligible entities, and the implementation timeline will be finalized following consultations with relevant agencies, including the Korea Exchange.
Legislative efforts regarding high-frequency trading in general have also begun in the National Assembly. Kim Seung-won, a member of the Democratic Party of Korea on the National Assembly’s Political Affairs Committee, has proposed an amendment to the Capital Markets Act that would impose an “excessive quote levy” on trades involving the repeated submission, amendment, and cancellation of large volumes of quotes.
While the securities industry maintains that “increased profits resulting from higher trading volumes do not necessarily imply illegality or conflicts of interest,” the fact that industry profits and individual investor losses were observed simultaneously in the same products is expected to make this a key focus of scrutiny during the National Assembly’s parliamentary audit.