South Korea's retail leverage market experienced a sharp contraction on July 13, with 1.2 million leveraged trading accounts triggering margin calls, according to trading data circulating in the market. Between 320,000 and 360,000 of those accounts were fully liquidated by brokers, some leaving investors with negative balances owed to their brokers.
The forced liquidation wave coincided with an 8.07 percent decline in the KOSPI composite index on July 13, the largest single-day drop in the country's benchmark equity benchmark in months. Brokers executing forced sales to meet margin requirements typically sell collateral assets—stocks and cryptocurrencies—without waiting for market conditions to stabilize, which can amplify downward pressure across both regional equities and digital asset markets.
South Korea has emerged as one of the world's largest retail leverage markets. The Korea Financial Investment Association, the industry's self-regulator, tracks forced liquidation volumes in won but does not publish granular account-level data by trigger status or liquidation outcome. Public data through July 10 showed forced liquidation volumes climbing, but no official statement has enumerated the account counts or negative balance figures reported on July 13.
Retail leverage trading in South Korea typically uses equities and cryptocurrency holdings as collateral. During periods of sharp price declines, margin calls force brokers to liquidate positions at unfavorable prices, creating a feedback loop that can drive further losses across asset classes. The scale of forced selling on July 13—potentially hundreds of billions of won in asset sales—suggests broad pressure on both the KOSPI and cryptocurrency holdings used as collateral.
The negative balances reported in some accounts indicate that liquidation proceeds were insufficient to cover borrowed amounts, leaving those investors with outstanding debt to their brokers. Recovery of such debt typically requires legal action or negotiated settlement.
