Ruling Party Proposes Extension of 'Short Selling Ban'... "Decision by End of February"

"Majority Opinion to First Extend and Organize the System"
"Will Conclude After Consultation with the Financial Services Commission Chairman"

Kim Tae-nyeon, floor leader of the Democratic Party of Korea, is attending the policy coordination meeting held at the National Assembly on the 7th and delivering opening remarks. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Han Jinju] The Democratic Party of Korea has settled on extending the 'short-selling ban,' which is set to expire on March 15.

On the 20th, Shin Young-dae, the party spokesperson, told reporters at the National Assembly, "The overall party atmosphere is that, from the perspective of market liquidity and protecting individual investors, the harms of short-selling should be addressed by first extending the ban and then refining the system."

Shin added, "Financial Services Commission Chairman Eun Sung-soo has said he will consult with the National Assembly. A conclusion will be reached during the consultation process."

A policy committee official told reporters, "We have decided to observe the market situation a bit longer before making a decision," adding, "Since there is still time, we plan to announce it around late February or early March."

Lawmakers from the same party?Song Young-gil, Woo Sang-ho, Yang Hyang-ja, and Park Yong-jin?have publicly stated that the short-selling ban should be extended. Lawmaker Song said on Facebook, "We should first extend the short-selling ban to buy time and prepare innovative measures for short-selling."

Lawmaker Woo said, "The short-selling ban has been postponed due to the 'tilted playing field' theory between retail and institutional investors, which has harmed retail investors. Since that issue has not been resolved, the ban period must be extended."

However, Lawmaker Oh Ki-hyung expressed the view that short-selling should be resumed, citing foreign investor withdrawal and declining trust in the domestic stock market.

Oh pointed out, "There is no evidence that short-selling necessarily induces stock price declines, and most countries maintain normal short-selling systems. Even with supplementary measures such as strengthening penalties for illegal short-selling at the end of last year through a bipartisan amendment to the Capital Market Act, if the short-selling ban is extended, when and under what justification will it be lifted in the future?"