[현장에서]The Financial Services Commission disappeared from the short selling debate

The financial committee disappeared. The Financial Services Commission, which is the ministry in charge of financial policy, has been unable to speak out in discussions on the extension of the ban on short selling, which has a significant impact on the financial market.

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

Recently, officials from the Financial Services Commission have been “quieting” about short selling. Even in matters related to system improvement, such as how individuals participate in short selling, only the words “I have nothing to say now” are repeated. Financial Commissioner Eun Seong-soo also said on the 18th, “Please understand that neither I nor the staff of the Financial Services Commission will be able to talk to me about this issue.” Chairman Eun handed over the ball to the Financial Services Commission, saying, “A matter related to short selling is a matter to be decided at the general meeting of the Financial Services Commission consisting of nine members.”

The Financial Services Commission did not practice silently from the beginning. On the 11th, the Financial Services Commission sent a text message to reporters stating that the ban on temporary short selling is scheduled to end on March 15th. After that, citing a high-ranking official from the Financial Services Commission and reporting that’the resumption of short selling has not been decided’ came out, on the next day, on the 12th, the text message sent on the 11th was the official position of the financial authorities.

The reason that the Financial Services Commission changed to silent mode was under intense pressure from individual investors and politicians regarding the resumption of short selling. A national petition requesting the dismissal of Chairman Eun Seong-soo was also posted on the Blue House petition bulletin board. In the political world, harsh reactions such as “The financial authorities ignoring the National Assembly and the Prime Minister are unpleasant” (and Democratic Party lawmaker Park Yong-jin) also came out.

The FSC’s silence may be an effort to reduce confusion before deciding on sensitive matters. However, the point of concern is whether the Financial Services Commission will speak up on financial policy decisions. While the Financial Services Commission continues its silent practice, it is the politics that leads the discussion on short selling.

The ruling Democratic Party, which is the ruling party, has poured out a series of remarks focused on extending the ban on short selling. There are reports that quoting Democratic Party officials, “limited short selling is allowed from June”. Even before the Financial Services Commission, which decides to extend short selling, is already in effect, the extension is already a fact.

A bill related to short selling was initiated during the last 20s by the National Assembly. All bills were scrapped due to expiration. Homepage capture

It is not unusual for the politicians to speak out about the short selling system. This is because various legislative tasks, such as strengthening punishment for illegal short selling and seeking ways to improve the system, are the role of the National Assembly.

The problem is the timing and background of this discussion. There are doubts that the ruling party is insisting on extending the ban on short selling if short selling resumes as scheduled for about three weeks ahead of the Seoul and Busan mayoral elections (April 7). This is the reason why it is pointed out that they are focusing only on’one iron business’ called local elections rather than serious concerns about the short selling system.

There is a basis for this point. In fact, the politicians have been indifferent to improving the short selling system. At the time of the 20th National Assembly (2016-20), there were 14 bills proposed to improve the short selling system. It is a bill containing details such as strengthening penalties for illegal short selling and establishing a real-time monitoring system for short selling. All of these bills were abolished due to expiration of their terms, not exceeding the threshold of the Political Affairs Committee, which is a standing committee under jurisdiction. Even the contents of the discussion on the bill remain in the records or minutes of the Political Commission. It can only be seen as the result of thorough indifference.

Although individual investors claim that it is a’sloping playground’ to foreigners and institutional investors, short selling is a system where both net and dysfunctional functions exist. Market participants and experts disagree on whether or not to resume short selling due to institutional deficiencies. Nevertheless, what is needed now is the role of the Financial Services Commission, which is at the center of the discussion on short selling.

Hwang Se-woon, a research fellow at the Capital Market Research Institute, said, “It is not public opinion and political logic, but bureaucrats and expert groups should take the center and consider the economic effects comprehensively.” It is not only worrisome but also irresponsible that the politicians who raise their voices by taking advantage of public opinion as if they were a leader in improving the’shiny’ system during the election season as if they were a leader in the improvement of the’shiny’ system.

Reporter Ahn Hyo-seong [email protected]