The Financial Services Commission (FSC) of South Korea announced on Sunday that it will be temporarily suspending stock short selling until the beginning of July 2024. This decision was made in order to reduce market volatility and combat illegal short selling activities by global investment banks (IBs).
FSC chief Kim Joo-hyeon and the head of the Financial Supervisory Service, Lee Bok-hyun, both spoke at a joint press briefing, citing “growing external uncertainties” as a reason for the ban. These uncertainties include a global economic slowdown and the war between Israel and Hamas.
The FSS had previously announced a plan to form a special task force to inspect all global IBs for illegal short selling. This came after two Hong Kong-based IBs were suspected of short selling 56 billion won (US$42.7 million) worth of stocks while being aware that they would not be able to borrow the shares sold.
The government plans to reform the system by the end of June 2024 in order to prevent illegal naked short selling in real time. The FSC also stated that it will review alternative ways to establish a system that will ensure fair pricing of stocks in the local stock market.
Kim Joo-hyeon (at podium), head of the Financial Services Commission (FSC), and Lee Bok-hyun, chief of the Financial Supervisory Service, hold a joint press briefing in Seoul on Nov. 5, 2023, in this photo provided by the FSC. (PHOTO NOT FOR SALE) (Yonhap)
An illustrated image of stock short selling (Yonhap)
bdk@yna.co.kr (END)
Related Articles
Financial regulator to inspect all global IBs for illegal short selling
Financial regulator moves to fine two IBs for illegal short selling
FSS asks foreign securities firms to strengthen efforts to prevent illegal stock short selling