Finance Commissioner Eun Seong-soo is holding an opening ceremony at the ‘2021 Securities and Derivatives Market Opening Ceremony’ held at the Korea Exchange in Yeouido, Seoul on the 4th.[사진=연합뉴스]
The Financial Services Commission announced on the 11th that it would finish improving the system with the goal of restarting short selling from mid-March through a notice. The Financial Services Commission explained that “the temporary ban on short selling due to Corona 19 will end on March 15.” He added, “With the aim of resuming short selling in March, we plan to improve the system, such as strengthening the punishment for illegal short selling, improving the market maker system, and improving individual accessibility for short selling.”
This is interpreted as drawing a line in the recent controversy over the’extending the ban on short selling’ raised both inside and outside the political sphere. In addition, the Democratic Party’s Supreme Council Member Yang Hyang-ja pointed out that “we must seriously consider the extension of the ban on short selling” at the Supreme Council on the day. Previously, Park Yong-jin, a Democratic Party lawmaker, and others asked the Financial Services Commission to carefully review the resumption of short selling.
In March of last year, the financial authorities decided a market action banning short selling of all listed stocks for the next six months as stock prices plummeted in the aftermath of the Corona 19 crisis. Since then, as the spread of Corona 19 remains, the measures have been extended for six months.
Ahead of the resumption of short selling in March, there is strong backlash among individual investors. This is because short selling, betting on a decline in the stock price, could bring cold water to the recent boom in Korean stocks.
On the other hand, some argue that banning short selling for a long time is contrary to the flow of international capital markets. In addition, it was pointed out that the net function of’forming an appropriate price’ through short selling is necessary.
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