Amid controversy over the resumption of short selling ahead of the end of the short selling ban period, Eun Seong-soo, chairman of the Financial Services Commission, who attended the political committee’s party-political consultation held at the National Assembly on the 29th, is watching Chun Hyun-hee, chairman of the National Rights Commission of Korea. Photo = Yonhap News
In addition, the Democratic Party and the financial authorities have decided to extend the ban on short selling once more. The resumption of short selling is known to be prevalent on June 15th, three months after schedule.
A key Democratic Party official said on the 31st, “Unless the short selling system is abolished, resumption is inevitable,” and “We are discussing with the financial authorities how to resume after the illegal short selling penalties and the computer system were implemented.” The’integrated individual lending system’ to promote individual short selling is expected to be established only in June.
The Financial Services Commission temporarily banned short selling until September after the stock price collapsed due to the corona 19 in March last year. The ban has been extended once and is about to resume on March 16, but the party government is known to be considering an additional extension due to backlash from individual investors. It is reported that the Democratic Party has gathered opinions to extend the short sale by only three months, taking into account the side effects of the International Monetary Fund’s (IMF) recommendation to resume short selling and the withdrawal of foreign funds due to continued short selling.
In politics, criticism has emerged that the ruling party is trying to postpone the resumption of short selling after the election, conscious of the voter’Donghak ants’ ahead of the re-election in April.
與 “Respond to’fake news’ that raises anxiety over short selling” to the Financial Services Commission
The reason why the government and the ruling party intend to extend the ban on short selling one more time is primarily tied to the effective date of the amendment to the Capital Markets Act. The amendment to the Capital Markets Act, which strengthens the punishment for illegal short selling, will take effect on April 6. It is analyzed that the party is feeling a burden to resume short selling before the enforcement of the law in a situation where there is great concern over illegal short selling forces. Individual investors argue that there is a limit to preventing illegal short selling with the system improvement proposed by the Financial Services Commission and that short selling should not be resumed until the problem is resolved.
It was also a judgment that individual investors’ anxiety over short selling remained. Short selling is an investment method in which stocks are borrowed and sold when the stock price is expected to fall, and if the stock price actually falls, it is bought back at a low price and paid back. Individual investors believe that the stock price cannot rise due to short selling.
In addition, the Democratic Party believes that individual investors’ anxiety over short selling is excessive. The ruling party demanded that the Financial Services Commission actively respond to’fake news’, which aggravates anxiety over short selling transactions.
Rep. Kim Byeong-wook, a secretary of the ruling party of the Political Affairs Committee, said in the party-political consultation held on the 29th, “The anxiety surrounding short selling is amplifying, centered on the online stock community,” and asked the Financial Services Commission to actively clarify this and promote the improvement of the short selling system. Demanded. The ruling party’s judgment is that a move to abolish short selling among’Donghak ants’ is spreading as fake news that promotes anxiety such as “if short selling resumes, stocks will collapse” in the online stock community recently. Rep. Kim said, “In Korea, there are erroneous contents such as that there is no system for monitoring illegal short selling without borrowing, but this is not true at all.”
Reporter Lee Dong-hoon/Hyung-ju Oh/Mi-Hyun Cho [email protected]
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