At the Democratic Party of Korea 8·17 convention, single-stock leveraged exchange-traded funds (ETFs) emerged on the 6th as a key point of contention. Party leader candidate Rep. Jung Cheong-rae demanded an apology, saying leveraged ETFs, identified as a main driver of increased volatility in the domestic stock market, were introduced during his rival Rep. Kim Min-seok’s tenure as prime minister. The Kim Min-seok camp protested, saying “Attacking policies introduced during the prime minister’s tenure is the same as attacking the president.”

On Facebook that day, Rep. Jung said, “As a former prime minister, Rep. Kim should apologize to citizens shedding bitter tears because of single-stock leveraged ETFs,” adding, “We must not try to sweep this under the rug like Shincheonji.” He continued, “I asked during the TV debate the previous day, but there was no answer, so I reiterate the demand.” At the KBS TV debate for party leader candidates the previous day, he had said, “Leveraged ETFs were introduced after a notice of legislation and a Cabinet meeting during Rep. Kim’s term as prime minister,” thus demanding Kim’s apology for a second straight day.

Rep. Jung said the Financial Services Commission is, under current law, an organization under the Office of the Prime Minister, and that there had been no consultation with the party in the process of introducing leveraged ETFs in May. In the debate the previous day, Jung said, “If there had been consultation with the party, I would have asked that we proceed with caution.” In response, Rep. Song Young-gil, who has been aligning with Rep. Kim in criticizing Jung, said in the debate, “There must have been an extreme lack of trust for such (party-government) consultation not to occur,” adding, “When problems arise for the public, the posture of a ruling party leader is for the party to take full responsibility, rather than shifting it to the prime minister or the president.”

There were also differences among the leadership contenders over follow-up measures on leveraged ETFs. Jung said, “First, suspend (trading), and then draw up countermeasures.” By contrast, Kim said, “A suspension of trading would bring even greater confusion,” and added, “If I become party leader, I will expand and reorganize the existing K-capital market special committee to include private-sector experts, and prepare robust measures.” While drawing a line against a trading halt, Song proposed additionally raising the minimum deposit from the current 30 million won to 50 million won.

Figures aligned with the pro-Lee Jae Myung camp pushed back against Rep. Jung. One lawmaker assisting Kim said by phone that day, “Attacks on matters pursued during Rep. Kim’s time as prime minister are, in the end, attacks on the government position represented by the prime minister, and an attack on President Lee Jae Myung.”

The Kim Min-seok campaign issued a statement that day saying, “We have confirmed that the false claim that the introduction of leveraged ETFs was ordered by former Prime Minister Kim is being spread,” and declared, “We will take immediate legal action against this clear fake news.”

Within the party, some cautioned against allowing leveraged ETFs to escalate into a convention flashpoint. Rep. Kim Young-jin said on MBC radio that day, “More caution should have been exercised with the launch of leveraged ETFs,” and added, “Rather than raising the question of responsibility during the primary period, we need to conduct the discussion in a more refined manner.”