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| ▲ The logo of the Financial Services Commission (FSC) is seen in this undated file photo provided by the FSC. (PHOTO NOT FOR SALE) (Yonhap) |
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| ▲ An illustrated image of stock short selling (Yonhap) |
stock short selling-suspension
S. Korea suspends stock short selling until start of July 2024
SEOUL, Nov. 5 (Yonhap) -- South Korea's financial regulator said Sunday that it will temporarily ban stock short selling until the second half of next year, amid efforts to crack down on illegal short selling by global investment banks (IBs).
The move will be effective as of Monday, according to the Financial Services Commission (FSC).
"From tomorrow (Nov. 6, Monday) until the end of the first half of 2024 (end of June 2024), short selling is banned for all stocks listed on the local market," the FSC said in a press release also distributed by the Financial Supervisory Service (FSS).
The financial regulators highlighted "growing external uncertainties" fueled by a global slowdown and the war between Israel and Hamas that they said are causing concerns in the domestic market.
"Under such conditions, concerns over the fair pricing of stocks in the local stock market remain very high as illegal naked short selling by foreigners and institutional investors continues to get exposed repeatedly despite our continued efforts so far to improve the system," the financial regulators said.
The FSS announced last week a plan to form a special task force to inspect all global IBs for illegal short selling. The move came after the financial watchdog exposed two Hong Kong-based IBs 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 FSC said the government will work to reform the system before the end of June 2024 so that short selling will no longer create what many here, including ruling party lawmakers, have claimed to be an "unlevel playing field."
"It will review alternative ways to establish a system that will prevent illegal naked short selling in real time," it said.
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