The SEC should ban the products behind South Korea's recent market meltdown | Fortune

Fortune argues the U.S. Securities and Exchange Commission should ban the products behind South Korea’s recent market meltdown—leveraged ETFs that amplify daily moves in tech. South Korean retail investors put $9.4 billion (14 trillion won) into the funds in under two months, just as two AI-related “star” stocks reversed after strong gains earlier in the year. As AI sentiment cooled and China-related competition threatened SK Hynix’s position, the tech selloff pulled down names including Micron, Intel, SK Hynix and Nvidia. On the worst day, SK Hynix and Samsung dropped 14.7% and 13.4%. The article says leveraged ETFs rebalance each day, creating a volatility loop and “volatility decay,” so even if stocks recover, ETF losses can remain severe over time.