The final decision in February is whether to resume short selling, which ends March 15. The key to the decision is held by 9 members of the Financial Services Commission, including Finance Committee Chairman Eun Sung-soo. However, as pressure from politicians and individual investors over the resumption of short selling is intensifying, the FSC is also deepening concerns. In the financial sector, it is predicted that the intention of President Moon Jae-in will determine whether to resume short selling.
Finance Commissioner Eun Seong-soo is explaining the work plan of the Financial Services Commission for 2021 at the joint briefing room of the Seoul Government Complex in Jongno-gu, Seoul on the 18th. News 1
February 17th is the fateful day to resume short selling?
Finance Commissioner Eun Seong-soo gave an answer on the 18th, “The resumption of short selling is a matter to be decided at a meeting of the Financial Services Commission consisting of nine people.” Chairman Eun handed over the resumption of short selling to the general meeting of the Financial Services Commission, and the market is drawing attention, including individual investors.
Currently, the members of the FSC plenary are four ex officio members including Chairman Eun, Vice Chairman Do Gyu-sang, Standing Committee member Choi Hoon, and Non-standing Committee Member Shim Young, and 1st Vice Minister of Strategy and Finance Kim Yong-beom, Financial Supervisory Service Director Yoon Seok-heon, President of Korea Deposit Insurance Corporation, Lee Seung-heon, vice president of the Bank of Korea. People. In November of last year, standing member Lee Seong-ho retired after his term of office expired, leaving a vacancy.
As for the matters related to the ban on short selling, which is a market measure, the resolution of the FSC is correct. On August 27, last year, a decision was made through a meeting of the Financial Services Commission to extend the ban on short selling for an additional six months. However, it was decided to extend the ban on short selling by holding a written meeting on the 27th, a day after the regular meeting (August 26).
The regular meeting of the Financial Services Commission scheduled for February is the 17th. Regular meetings are usually held every other Wednesday, because the schedule is not correct due to the Lunar New Year holidays. Therefore, it is predicted that whether to resume short selling will be decided on this day. Of course, it may be decided through an extraordinary meeting or a written meeting rather than a regular meeting as in August of last year.
A national petition regarding the suspension of short selling posted on the Blue House petition bulletin board. As of the 20th, more than 160,000 people agreed. Blue House Homepage
Membership tendency resumes short selling Public opinion is a problem
Looking at the propensity of the members of the FSC plenary meeting, it is the main opinion that there are not many members against the resumption of short selling. This is because, as bureaucrats, university professors, and central bank members, they are inclined to value financial stability and global standards.
According to the minutes of the 2nd Provisional Financial Services Commission, which voted for the ban on short selling in March last year, the committee members asked whether the ban on short selling was lifted early when the market conditions normalized, and whether short selling resumed without further resolution after the end (Sep 15) Only confirmed.
However, public opinion and circumstances are not easy for the FSC to decide to resume short selling. Ahead of the Seoul and Busan mayoral elections, the ruling party continues to insist on extending the ban on short selling. Prime Minister Jeong Sye-gyun also appeared at YTN on the 20th and said, “The short selling system in Korea has not been properly operated until now,” and said, “It is not desirable to resume (short selling) without prior system improvement.” Rep. Kim Jin-pyo also said on the radio on the same day, “There is no need to rush (to resume).”
President Moon Jae-in held an on-off mixed-style New Year’s press conference at the Cheongwadae Chunchugwan on the 18th, revealing the politics issue and the direction of this year’s state administration. Blue House Photo Reporters
In the end, the variable is President Moon’s intention?
It is also interpreted that an important variable in the decision to resume short selling is the intention of President Moon Jae-in. President Moon’s New Year’s press conference on the 18th was seen as an opportunity to confirm this. However, at the press conference, there was no inquiries about the resumption of short selling, so it was impossible to determine the significance.
In July last year, the Ministry of Strategy and Finance announced an amendment to the tax law and raised the basic stock capital gains tax deduction to 50 million won, according to President Moon’s remark, “You should not discourage individual investors.” If the money earned by investing in stocks exceeds 20 million won per year, it was decided to pay the transfer tax, but it was corrected to only pay taxes when earning more than 50 million won per year.
An official from the financial sector said, “Most of the financial committee members, such as the Financial Services Commission and the Vice Minister of the Ministry of Finance, are bureaucrats after all, and President Moon’s intention will be the most important variable in the decision.”
A text sent by the Financial Services Commission on the 11th and 12th regarding the resumption of short selling.
Financial Services Commission’s text raised to reduce market confusion
It was a text sent by the Financial Services Commission to the reporters on the 11th that fueled the controversy over the resumption of short selling. The letter contains: ▶The temporary ban on short selling is expected to end on March 15. ▶The financial authorities plan to complete system improvement with the aim of resuming short selling in March.
The reason why the Financial Services Commission urgently sent such a text message was due to concerns that the extension of the ban on short selling in the market would be accepted as a fixed fact due to the remarks of the Democratic Party’s Supreme Council member Yang Hyang-ja.
An official from the Financial Services Commission said, “The text is not that it has decided to resume short selling, but that the temporary measure banning short selling in August last year will end in March.” It was a measure to prevent confusion when it was decided.”
However, contrary to this intent, the text created more confusion. Short selling, which is a sensitive issue, was disclosed without sufficient deliberation on the resumption, and political backlash increased. Responses such as “the financial commission officials’ de facto supremacy” (Democratic Party lawmaker Park Yong-jin) are representative.
There are also concerns that the policy will be decided according to the flow of politics or public opinion rather than evaluating the impact of short selling on the market. Oh Jeong-geun, chairman of the Korea Financial ICT Convergence Association, said, “In order to protect the political pressure and the symbolic number of KOSPI 3000, we should not decide to extend the ban on short selling without careful review.” Of course, investors can suffer a lot.”
Reporter Ahn Hyo-seong [email protected]