[단독] Dangjeong, ant investor stock short selling’gradual allowance’ review… Introduction of market stabilization measures

Input 2021.01.15 15:40

Individual investors dissatisfied with the resumption of short selling
Finding ways to eradicate illegal short selling and strengthen personal accessibility
Individual’gradual allowance’ for judgment of “high risk”
Discussing’Introduction of short selling margin system and establishment of investor qualification requirements’

In addition, it is reported on the 15th that the Democratic Party and the government are considering strengthening the accessibility of short selling for individual investors ahead of the lifting of the ban on short selling on March 16th. It is reported that discussions are being made about the establishment of a margin clause in which cash must be deposited in the short sale transaction, or the method of differentially granting investment limits by setting a minimum investment amount standard.

In addition, it is known that it is under consideration to grant qualifications only to investors who have completed the training course to participate in short selling. It is an approach to gradually expand investment targets in consideration of the risk of short selling transactions.

Democratic Party lawmaker Kim Byeong-wook, secretary of the ruling party of the National Assembly’s Political Affairs Committee, said in a call with Chosun Biz, “If short selling is to be resumed, (individual investors) full permission is in principle correct, but it can be dangerous to allow investment to all individuals without trading experience. “As long as there is, we are looking at gradual openness, that is,’allowing in stages’.”

The atmosphere within the party, which strongly opposed the financial committee’s announcement of the resumption of short selling on the 11th, is also changing. A key member of the Democratic Party said, “There is a concern that the political community is not good enough to intervene in matters that should be determined at the discretion of the Financial Services Commission. It is not desirable for the Party to address this issue until the Financial Services Commission comes up with measures to improve the short selling system.” Said. Another official said, “Short selling is a matter that sharply diverges even among experts,” and said, “It should be discussed at the standing committee in charge, but in principle it is correct to decide by the Financial Services Commission.”

The Financial Services Commission is discussing the range of investments allowed in the Task Force (TF) to promote personal short selling. TF is expected to announce the final decision in February. The Democratic Party and the Financial Services Commission plan to hold a party meeting in mid-February to finalize the relevant details.

Short selling is an investment method in which a stock is borrowed and sold, and when the stock price falls, the stock is repurchased and repaid to make a profit. In the domestic market, 99% of short selling transactions are made by institutional investors and foreigners. There is no stipulation that “individuals cannot sell short”, but this is because it is a system that makes it difficult for individuals to lend small amounts from securities companies.

Accordingly, it has been pointed out that individuals should be given equal investment opportunities. The party government plans to resolve the’equity’ controversy by creating measures to strengthen individual investment accessibility before resuming short selling. It is being discussed how to allow transactions only to investors who have deposited more than a certain amount of margin or meet the minimum investment amount requirement.

An official from the financial sector said, “There are disagreements about the range of individual short selling investments, but there is a consensus that it is correct to pursue it gradually,” he said. “The financial authorities are thinking about introducing a margin system.”

However, some point out that it is difficult to alleviate the anxiety of individual investors by granting certain qualifications, such as margin, so that individuals can participate in short selling. An official from the Democratic Party said, “individual investors with qualification requirements will be some such as’super ants’, and it is not known whether this will alleviate the overall complaints.”

The party government is also planning to closely review the market effects of laws and systems established to eradicate illegal short selling. The revised bill of the Capital Markets Act, which is subject to a penalty of 3 to 5 times the profits obtained from short selling without borrowing stocks, or subject to imprisonment for more than one year, will be implemented in April, and a comprehensive short selling monitoring system will be established in the third quarter of this year. .