FSS reviews W10tr debut trading as ETF giants battle for market share Financial Supervisory Service headquarters (FSS) South Korea's financial regulator has launched a fact-finding review of newly listed single-stock leveraged exchange-traded funds tied to Samsung Electronics and SK hynix after signs of unusually heavy trading raised questions about how the products generated more than 10 trillion won ($6.65 billion) in turnover on their first day.According to industry sources Monday, the Financial Supervisory Service recently contacted several brokerages acting as liquidity providers, or LPs, and asset managers to gather information on trading practices surrounding the products.The review has drawn attention to a little-known corner of the ETF market: the role of LPs, the firms responsible for ensuring investors can buy and sell ETF shares smoothly.LPs continuously post buy and sell quotes to maintain liquidity and keep ETF prices aligned with the value of their underlying assets. Because they must remain active throughout the trading day, LPs often account for a large share of ETF trading volume.The issue in this case is whether some of that activity may have intentionally exaggerated the appearance of investor demand.Industry attention has focused on several brokerages, including Yuanta Securities, LS Securities, SK Securities and Daol Investment & Securities, which recorded unusually large trading volumes on the products' debut.Exchange rules prohibit LPs from trading directly with themselves. However, market participants say trading can sometimes occur through "cross-matching," in which one brokerage's LP sells while another brokerage's LP buys at nearly the same time.Such transactions are not automatically illegal and can occur naturally as part of market-making activities. Critics, however, argue that excessive LP-to-LP trading can inflate turnover figures without reflecting genuine investor demand.The scrutiny comes as competition in South Korea's ETF industry intensifies.The domestic ETF market has surpassed 500 trillion won in assets, with major asset managers such as Samsung Asset Management and Mirae Asset Global Investments battling aggressively for market share. The launch of the country's first single-stock leveraged ETFs tied to Samsung Electronics and SK hynix has become the latest front in that competition.LP activity has long been an accepted part of ETF trading. What made this case stand out was the scale of the volume generated on launch day, when turnover exceeded 10 trillion won and some brokerages handled tens of millions of ETF shares.According to sources, part of the FSS review has focused on Samsung Asset Management, whose products recorded the largest trading volume on debut, as well as several brokerages that served as LPs.Still, industry officials say proving wrongdoing would be difficult even if regulators identify unusual trading patterns."The key question is not whether the trades were technically self-dealing, but whether they occurred naturally or were intentionally arranged," said a senior asset management executive who requested anonymity. "If participants argue the matching was coincidental, proving otherwise would be extremely difficult."The FSS struck a cautious tone, saying higher trading volumes alone do not indicate wrongdoing or prearranged trading. The regulator noted that LPs are expected to continuously provide liquidity by posting both buy and sell quotes.