Prohibition of short selling and extension… Even in the last compromise, controversy is inevitable

The Financial Services Commission held the first extraordinary meeting on the afternoon of the 3rd and decided on such a plan.

First of all, the ban on short selling, which was applied until March 15th, will be extended until May 2nd. The Financial Services Commission banned short selling for six months after the stock price plunged due to the Corona 19 incident in March last year, and extended it for another 6 months considering the prolonged corona 19 incident.

The financial authorities were strongly willing to resume short selling this time, but it seems that individual investors and politicians joined forces to raise the level of offensive and turned their stance. In order to solve the’sloping playground’, the card was selected to resume with large-cap stocks after finishing system improvement.

The KOSPI 200 and KOSDAQ 150 constituents, which are subject to reopening, have a large market capitalization and high liquidity, so the impact of short selling on price is limited. The decision to resume some of the resumptions on May 3 reflected on-site opinion that it would take about two months for the process of computer development and pilot operation.

For the rest of the stocks, a separate reopening point was decided in consideration of the effect of the resumption and ban, and market conditions. It is an extension of the ban without a separate deadline.

The financial authorities are expected to focus on improving the system for the remainder of the year in a way to resolve distrust of individual investors.

However, accusations that it is a short-term measure are rising fiercely around individual investors. Some point out that it is a measure with the re-election of Seoul and Busan mayors scheduled for April 7th in mind.

“If the index falls due to short selling of large stocks, other stocks are linked to index-linked products, and other stocks cannot escape from the declining typhoon zone,” said Eui-jeong Jeong, president of the Korea Stock Investors Association.

These individual investors are demanding a complete abolition following the extension of the short selling ban. On the 1st, Han Too-yeon declared a war on short selling and agreed that the ban on short selling in Korea should be extended for one year to correct injustice.

The political influence also played a strong role in the decision to extend the ban on short selling. In addition to Democratic Party lawmakers Park Yong-jin and Yang Hyang-ja, Prime Minister Jeong Sye-gyun has also requested an extension of the ban on short selling.

On this day, Rep. Park Yong-jin delivered a position of’welcome’ regarding the extension of the financial authorities’ ban on short selling.

However, Congressman Park said, “It is regrettable that the computerized system that the financial authorities have professed is not obligatory.” Plan”.

Rep. Kim Byung-wook, chairman of the Democratic Party’s Capital Market Special Committee and secretary of the National Assembly’s Political Affairs Committee, said, “To resume short selling, we have three measures of precautionary prevention and post-penalty reinforcement, real-time monitoring and supervision. “We have to go together,” he said, “The Financial Services Commission will have to build a system for the smooth operation of the system and prevent the expansion and reproduction of inaccurate information on the market.”

On the other hand, Rep. Ha Tae-kyung said, “Of course, it is said that the ants are unfairly improving the system and the resumption of parts centered on high-quality liquor. It is the financial committee that has to decide.”

He added, “The recovery of fairness in the market for short selling is the first, and the by-election strategy of the ruling party should not be given priority.”