On Thursday, the Financial Supervisory Service (FSS) of South Korea implored foreign securities firms to bolster their efforts to halt illegal stock short selling as the number of such cases has been increasing.
At a meeting with the compliance officers of 23 foreign securities companies, the FSS asked for an enhancement of the companies’ internal control system and a review of their short selling process.
This year, the FSS has already imposed fines of a total of 10.18 billion won (US$7.6 million) in 27 cases, including 19 involving foreigners, for unlawful stock short selling. This figure has been on the rise, from four in 2020, 14 in 2021, and 28 last year.
The FSS remarked that they will keep up their crackdown on illegal short selling and investigate the sufficiency of securities firms’ short selling process.
“We understand that most stock short selling violations are caused by mistake or error… but such acts cannot be pardoned due to limits resulting from work or unavoidable business practices,” an FSS official said.
At the meeting, the compliance officers agreed with the need to restore confidence in the market by eradicating illegal stock short selling, but they also called for initiatives to improve foreign investors’ comprehension of the South Korean market since there are discrepancies in trading customs and regulations on the matter.
An illustrated image of stock short selling (Yonhap)
nyway@yna.co.kr
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