FSC short on details about illegal short selling tracker, end of ban

The state financial watchdog said that it is devising a plan to monitor naked short selling, while giving no indication whether the current ban will be lifted in June as originally planned.

Financial Supervisory Service Gov. Lee Bok-hyun speaks during a panel discussion event with retail investors held in western Seoul on Wednesday. [YONHAP]

Korea’s financial watchdog will put forward details of an online system to monitor illegal short selling as early as next month, its chief said Wednesday, while remaining cautious on whether the current ban on illegal short sales of stocks will be lifted in June as previously announced.

“Regarding the establishment of an automated system [to monitor illegal short selling], the Financial Services Commission [FSC] as well as the Financial Supervisory Service [FSS] and the Korea Exchange has examined four or five options to effectively and preemptively shut down naked short selling,” said FSS Gov. Lee Bok-hyun during a panel discussion event held in western Seoul.

“We are examining about two or three of those options, and plan to announce the proceedings in a month or so at the earliest,” he said.

The latest forum, attended by retail investors, marked the first occasion that the head of the financial regulator met with retail investors in person to discuss illegal short selling.

Korea’s financial authorities imposed a curb on short sales on Nov. 5 that was set to be lifted in June.

However, President Yoon Suk Yeol said on Jan. 4 that “the ban on illegal short selling will be lifted only when a digital system to perfectly eliminate malpractices is established — if not, it will stay in place.”

Lee did not provide any definitive answers on whether short sales would fully resume in June.

During the event, Lee also expressed regret for the Hong Kong-tied equity-linked securities (ELS) incident, saying, “I apologize for the financial regulator’s failure to closely monitor the sales of high-risk investment products such as Hong Kong-tied ELS.”

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]