The issue surrounding short selling is hot. Although the Financial Services Commission came up with a proposal to resume short selling and improve the system,’Donghak ants’ have not stopped fierce opposition, saying, “Abolish short selling at all.”
Rep. Park Yong-jin (Democratic Party, Gangbuk-eul, Seoul) of the National Assembly’s Political Affairs Committee stressed, “We need to improve objectivity and transparency through system improvement such as reliably detecting and punishing illegal short selling and disclosing the practitioner.”
Rep. Park recently proposed an amendment to the Capital Markets Act that introduces a monitoring system to prevent illegal short selling in advance.
-The hatred of individual investors for short selling is so severe that even voices are voiced to abolish it.
“Individual investors want to prevent damage caused by illegal short selling, but the backlash seems more intense as the financial authorities emphasize only the net function of short selling. To allay the concerns of individual investors, it is important to secure objectivity and transparency of short selling. It is necessary to detect and punish illegal activities that pretend to be borrowing stocks that have not been borrowed.
-There are also criticisms that the resumption of short selling on May 3 is called’election measures’.
“It is necessary to focus on securing time for institutional improvement rather than the long and short period of extension of the short selling ban. In the meantime, financial authorities should show their focus on institutional improvement to gain market trust.”
-The most important part for improving the short selling system
“It is necessary to increase reliability by securing objectivity and transparency. The short selling process should feel no problem to anyone, but the problem is that individual investors feel reluctant to do so.
Before the kindergarten reform, I thought that the kindergarten would use the money paid by the parents on its own, but the founder was privately useful. By introducing edufine to kindergarten, we were able to secure objectivity and transparency that everyone could understand.
Likewise, the objectivity and transparency of the short selling system can be improved as much as possible by applying the technology currently used by the stock market.”
-The specific proposal for securing the objectivity and transparency of short selling
“On the 4th, we proposed an amendment to the Capital Markets Act, with the main idea of introducing a monitoring system to prevent illegal short selling. Short selling by requiring information held by the Financial Supervisory Service, KSD, Korea Exchange, and securities companies to be entered into the monitoring system. The entire process can be computerized and managed from the point of order. It also includes measures to strengthen the obligation to confirm short selling by securities companies. This allows financial authorities to immediately detect illegal short selling.”
-The Financial Services Commission is concerned about side effects such as astronomical cost and delay in transactions with Congressman Park’s amendment.
“It seems that the Financial Services Commission has misunderstood. It is not to monitor real-time, but to collect and manage information related to short sales separately. If only abnormal transactions such as inconsistent trading balances due to non-borrowing among short sales that have already been carried out are detected, like the improvement plan of the Financial Services Commission 1 It is much faster and more efficient to catch illegal activities than checking only once a month. It is technically feasible and not excessively expensive because it is an application of the technology that exists in the current stock market.”
-Is there any more information the financial authorities need to disclose regarding short selling?
“Until now, there are few cases except Goldman Sachs that the name of the company violating the illegal short sale has been disclosed. All those who have committed the illegal short selling such as securities firms and investors should disclose it to pay the price equivalent to breaking trust.”
-What do you think about activating short selling by individual investors?
“The revitalization of short selling for individual investors promoted by the Financial Services Commission is a premature measure, and there is a high risk of counteracting the protection of individual investors. It is necessary to actively prevent illegal short selling, leaving it unattended and activating short selling for individual investors will only cause further damage. .”
UPI News / Reporter Jaesung Ahn [email protected]
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