Korea Business News Agency - NSP NEWS AGENCY.

(Seoul=NSP NEWS AGENCY) = The blanket ban on short selling, which was extended until the end of this month, will be extended until March 30 next year. This is to establish a short selling computer system.

On the 13th, the Financial Services Commission announced that “the full ban on short selling, which was scheduled to end on June 30, 2024, will be extended to March 30, 2025.” However, short selling with borrowing that does not pose a risk of undermining market stability, such as by market makers and liquidity providers, will be permitted.

On November 5, last year, the Financial Services Commission approved a ban on short selling in response to the Financial Supervisory Service’s discovery of large-scale illegal short selling by global IBs. Since then, the government and related organizations have expanded the investigation into the reality of short selling and found a total of KRW 211.2 billion in suspected unborrowed short selling that occurred before the ban, while seeking fundamental systemic improvements to prevent illegal short selling.

Accordingly, it plans to establish a computerized short selling system to prevent borrowing-free short selling by the end of March next year. First, the Financial Supervisory Service will provide guidelines to support and guide institutional investors to prepare their own balance management systems to prevent borrowing-free short selling by the end of the year.

In addition, the Korea Exchange plans to establish a central inspection system(NSDS) to compare and inspect institutional investors’ balances, over-the-counter transaction information, and trading history by the end of March next year.

The Financial Services Commission said, “If short selling is resumed without a short selling computer system in place, there is concern that large-scale illegal short selling will occur repeatedly,” and “Therefore, the Financial Services Commission has decided to extend the ban on short selling from July 1, 2024 to March 30, 2025 to resolve concerns that fair price formation will be hindered by establishing a short selling computer system.”

By Soon-ki Lee(s8789@nspna.com) and Soo-in Kang(sink606@nspna.com)

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