Assemblyman Kim Byung-wook "Temporary Ban on Short Selling"... Financial Services Commission "Responding According to Situation"

[Asia Economy Reporter Ko Hyung-kwang] Kim Byung-wook, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, requested a 'temporary ban on short selling' from financial authorities, to which the Financial Services Commission responded, "We will respond according to the contingency plan."

On the 28th, Rep. Kim said, "Recently, due to the COVID-19 outbreak, the KOSPI and KOSDAQ indices have sharply declined, and retail investors' anxiety about short selling is also increasing," adding, "Temporarily banning short selling to stabilize investors' sentiment is an urgent task."

He continued, "As the COVID-19 crisis alert level has been raised to 'serious,' the government is reviewing and implementing measures across various ministries, including supplementary budgets, to minimize the economic impact of COVID-19," emphasizing, "However, it must be considered that if the securities market is unstable, the effectiveness of all these policies could be diminished."

Rep. Kim urged the financial authorities to take swift action, stating, "I have pointed out the problems of the short selling system several times." He explained that although the authorities are reviewing measures such as reducing exceptions to the uptick rule and designating stocks eligible for short selling, a temporary ban on short selling should be implemented separately to stabilize investor sentiment. The uptick rule is a regulation that prohibits placing bids below the market price when short selling.

Regarding this, a Financial Services Commission official said, "We are closely monitoring the market situation," and added, "Since a contingency plan is in place according to market conditions, we will respond accordingly."

Meanwhile, the authorities previously implemented temporary bans on short selling to prevent market instability during the 2008 global financial crisis and the 2011 European debt crisis.