Korea Securities Finance to Hold Forum on December 2nd Discussing Measures to Activate Individual Short Selling
[Asia Economy Reporter Kum Boryeong] Financial authorities are reportedly considering the introduction of 'Japanese-style short selling' to expand short selling opportunities for individual investors. Public opinion on this matter will be gathered next month.
According to financial authorities on the 29th, Korea Securities Finance will hold a forum on April 2nd focused on measures to activate individual short selling.
The Financial Services Commission plans to review opinions from the forum and then announce the final plan for promoting individual short selling.
Under the current system, individual investors face difficulties in short selling due to various restrictions. Institutional investors, whose creditworthiness is easier to assess, can easily conduct securities lending transactions through the Korea Securities Depository. In contrast, individual investors must borrow stocks from Securities Finance through securities firms to short sell, which imposes restrictions on the borrowable stocks, quantities, and durations.
According to Securities Finance, as of March 13th, just before the temporary ban on short selling was lifted, the number of stocks available for individual borrowing was 409. The total amount available was only 13.3 billion KRW.
Financial authorities have been considering Japanese-style short selling as a strong alternative. Japanese-style short selling lends a wide variety of stocks in abundant quantities through a unified securities lending provider.
Accordingly, the Financial Services Commission has expressed the need to gather public opinion on this matter.
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