[단독]The ruling and the opposition parties agreed to resume “short selling is essential”… ‘Extension’ fluid escapes ahead of the election

The National Assembly’s political affairs committee was called twice in November and December

Recognizing the net function of short selling and focusing on system improvement

Resumption agreement in March and plenary session passed in December

Over 3000 KOSPI “Insufficient System Improvement”

Political circles “prohibition of short selling, until after election”

Some “I can’t avoid responsibility when adjusting the stock market”

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“I hope that these (system improvement) work well together with the penalty system, so that our market will be recognized more globally, and ant investors are not losing money in the market, they are trading fairly, and we hope to become such a short selling market. (Omitted) No objection? We declare that each has been approved (December 2, 2020, Kim Byeong-wook, 1st Subcommittee Chairman of the Political Affairs Committee)”

After the opposition parties agreed and agreed to resume short selling in the stock market from March this year, the by-election of Seoul and Busan mayors in April, they suddenly changed their position, saying, “We need to extend the short selling ban. Some lawmakers are in a situation that opposes the resumption of short selling, saying, “Institutional improvement is not enough,” although the contents of the institutional improvement they initiated were reflected in the revised bill of the Capital Markets Act. Even in the opinion of the people who favored the resumption of short selling, it was even argued that “the short selling should be abolished immediately.”

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According to the minutes of the first subcommittee of the Political Affairs Committee released by the National Assembly on the 13th, on the 2nd of last month, the members of the ruling and opposition political committees agreed without disagreement to resume short selling.

According to the minutes of the meeting, the National Assembly’s Political Affairs Committee decided on a policy to resume short selling in March in the subcommittee on November 24 and December 2, and decided to amend the bill to improve the system. Accordingly, instead of resuming short selling, △New legal basis for limiting borrowed short selling △Prohibit participation of borrower short sellers △New obligation to keep and report securities lending transaction information △The Capital Markets Act, which contains system improvement measures such as criminal penalties for illegal short selling. The amendment was passed at the regular National Assembly on December 9.

Short selling refers to a transaction that borrows and sells stocks and then buys and repays stocks. Usually, institutional investors sell stocks short when they judge that the stock price of a particular stock has overheated. In this process, as the stock price falls, the overheated market price finds its place. However, there are continuing criticisms that institutional investors have superior access to information, which abuses short selling, causing stock prices to fall and individual investors to suffer damage.

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According to the minutes of the meeting, lawmakers of the ruling and opposition parties had no disagreement over the stock market or stocks with overheated short selling. At a meeting on November 24, Democratic Party Rep Lee Yong-woo said, “What kind of function does short selling is bad, it’s good?” It is true that the short selling issue is too exaggerated than it really is, so we understand.” Rep. Hong emphasized at the December 2 meeting that “there is a system that requires short selling for the capital market to advance.”

There were also discussions that the resumption of short selling should be hurried. Responding to the statement, “We will resume short selling in any way normally on March 15th, next year….”, the secretary of the Political Affairs Committee said, “There is no time for this. ‘If I said,’I could have put it a little longer than other bills.’ Accordingly, the Political Affairs Committee agreed to improve the system instead of restarting short selling, and the bill was handled by the National Assembly.

Among the lawmakers (Kim Tae-heum, Hong Seong-guk, Park Yong-jin, Kim Han-jeong, Lee Tae-gyu, and Kim Byeong-wook) who initiated amendments to the Capital Market Act related to short selling, the only bill that contained measures to ban short selling was the only proposition of the People’s Power of the People. Of course, the bill was scrapped when the ruling and opposition parties agreed to resume short selling.

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However, the National Assembly suddenly changed when individual investors netted the domestic stock market, and the composite stock index (KOSPI) crossed the 3,000 line.

Chairman Kim Byeong-wook, who presided over the meeting to resume short selling, appeared on KBS Radio that day and overturned his position, saying, “The improvement of this system is insufficient, then the ban on short selling should be extended further.” He said, “The financial authorities and the National Assembly should decide whether or not the slanted playground will become a fair market or not.” It means to discuss the reform of the system again after completing the revision of the law, incorporating the examination and voting of the bill, which is the only authority of the National Assembly members.

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Democratic Party Rep. Park Yong-jin argued that even though the bill was passed because the institutional improvement proposal he initiated was reflected in the Capital Markets Act, “resuming short selling without correcting injustices and institutional insolvency is for the financial authorities to abandon responsibility.” Among the Enforcement Decrees of the Capital Markets Act announced by the government on this day, the content of the law initiated by Congressman Park, where a person who sold short would be restricted from participating in capital increase after the plan for capital increase was announced.

They insist on the abolition of both the power of the people and short selling. Respondent Cho Kyoung-tae emphasized, “The resumption of irresponsible short selling means that we will give away our hands on the health of the stock market and the protection of individual investors,” and emphasized that “99% sacrifice should not be promoted for 1% profit.” For this reason, there is also a prospect that the ban on short selling will be extended until after the election.

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This’fluid departure’ by the politicians is concerned about the resumption of short selling about 20 days before the by-election held in April. This is because if the stock market falls sharply, the arrow will return to the politics and adversely affect elections.

The National Assembly turned its arrow back to the government, fearing that it would face headwind after making institutional improvements that did not meet the expectations of ant investors. An official from the Political Affairs Committee said, “I would not have expected that negative perceptions about the resumption of short selling would have grown so much.” “No.”
/ Reporter Kyu Gyu-Oh Ku [email protected]

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