According to Lanya
Investing.com – South Korea’s Financial Services Commission (FSC) said it will temporarily ban stock short selling until early July 2024, Yonhap News Agency reported. This is a move to prevent illegal short-selling activities by global investment banks.
The FSC press release on November 5 stated that the ban will be effective from November 6, 2023 to July 1, 2024.
Leading officials of the committee said the decision was made due to concerns that increased market volatility and illegal short selling could destabilize the market and affect the formation of fair prices.
Last week, the FSC announced plans to set up a task force to investigate illegal short-selling activities at all investment banks around the world.
This comes after financial regulators found two foreign investment banks short-selling 56 billion won ($42.7 billion) worth of stocks, knowing they could not borrow the shares.
The FSC said the South Korean government will seek to establish a system by the end of June 2024 to prevent illegal short selling.
South Korean President Yoon Suk Yeol’s office reacted to the FSC’s Nov. 5 announcement, saying leaders consider illegal stock short selling to be a serious “social evil.”
President Yoon Seok-yeol believes that it is necessary to upgrade institutional measures to prevent and punish these behaviors to protect all investors in the Korean stock market, including 14 million individual investors.
He confirmed that the Korean government will do its best to ensure fair market access and protect genuine investors.