FSC to seek lifting short-selling ban in line with market conditions

[Photo by MK DB]

South Korea’s Financial Services Commission Chairman Kim Joo-hyun said on Friday that he will consider fully lifting a ban on short selling by closely monitoring market conditions.

Financial authorities prohibited short selling in March 2020 amid a stock market turmoil caused by Covid. Since May 2021, short-selling has been allowed only for Kospi 200 and Kosdaq 150 index stocks.

“It is strange that only South Korea prohibits short selling, which does not conform to international standards given the size of our economy and the direction of capital market development,” Kim told reporters after attending a meeting with the heads of financial holding companies Friday morning.

“Short selling should naturally be normalized from the perspective of nurturing a capital market that meets global standards and protecting domestic and foreign investors,” Kim said. “However, there are various uncertainties regarding its timing and method, so we are continuously monitoring the situation.”

“We plan to listen to the opinions from market experts before implementing the normalization,” he added.

Earlier, Lee Bok-hyun, head of the Financial Supervisory Service, mentioned in a foreign media interview on Wednesday that “the government will consider lifting the ban on short selling by the end of the year if the financial market instability is resolved within a few months.”