Korea Financial Investment Association pocketed at least W4.4b in course fees as retail investors bled losses on single-stock leveraged ETFs

The Korea Financial Investment Association (KOFIA) has collected at least 4.4 billion won ($3.11 million) in mandatory course fees since the launch of single-stock leveraged ETFs tracking Samsung Electronics and SK Hynix.

The figure has drawn criticism that KOFIA’s required online pre-education courses for leveraged ETF trading have done little to protect retail investors or sharpen their awareness of risk — while the association itself has profited handsomely as individual losses mount.

As of late July, 799,435 people had enrolled in the mandatory pre-education course required to trade single-stock leveraged and inverse ETFs, of whom 743,760 had completed it, according to KOFIA and Newsis.

Anyone wishing to trade single-stock leveraged ETFs on the domestic market must first complete a mandatory course on the KOFIA Financial Investment Education Institute website. The enrollment fee is 4,000 won per person; based on the number of applicants, the association’s fee revenue from that course alone amounts to roughly 3.2 billion won.

Revenue from a second mandatory course — a guide to domestic and overseas leveraged exchange-traded products (ETPs) — pushes the total higher still.

Monthly completions of the ETP guide course averaged about 130,000 from January through April this year, then jumped to an average of 310,000 per month after single-stock leveraged ETFs launched in May. Of the roughly 1.16 million people who completed the course in the first half of this year, more than half — about 620,000 — did so in May and June.

Assuming roughly half of those May–June completions were driven by interest in single-stock leveraged trading, the associated fee revenue from that course would come to about 1.24 billion won.

Combined, KOFIA’s estimated course-fee revenue tied to Samsung Electronics and SK Hynix single-stock leveraged products totals at least 4.4 billion won.

That figure surpasses the management fee income earned by the asset managers that actually launched and run the products. Samsung Asset Management, the top player among the eight asset managers running single-stock leveraged products, had accumulated roughly 3.2 billion won in management fees through early this month.

Meanwhile, domestic retail investors are estimated to have lost as much as 56 trillion won on single-stock leveraged products, according to Citigroup Global Markets.

As individual losses deepened, questions surfaced over whether the pre-education requirement serves any real purpose. Critics note that the system cannot verify whether a user actually watches the video or completes the course in any meaningful way, making it little more than a procedural formality.

After the government announced a package of remedial measures for single-stock leveraged products, KOFIA extended the pre-education hours and revised parts of the course format on July 30.

jshan@heraldcorp.com