[2022 National Audit] Ruling and Opposition Parties Call for "Short Selling Ban"... Financial Services Commission Chairman Reprimanded

Kang Min-guk, People Power Party lawmaker, "Financial authorities should clarify stance on short selling"
Financial Services Commission Chairman, "Response is inappropriate"
Chairman of the Political Affairs Committee also says, "Individual losses in a falling market... It's time to implement a short selling ban"

[Image source=Yonhap News]

[Asia Economy Reporters Ji Yeon-jin and Lee Jung-yoon] On the 6th, Financial Services Commission Chairman Kim Joo-hyun was criticized by lawmakers from both ruling and opposition parties for not expressing his stance on the ban of short selling during the National Assembly's Political Affairs Committee audit session.

Kang Min-guk, a member of the People Power Party, pointed out at the audit, "Short selling accelerates the decline of stock prices, causing damage to individual investors," and described the short selling market as "a David and Goliath battle where institutions and foreigners, armed with capital and information, benefit."

He then referenced past bans on short selling during the 2008 global financial crisis, the 2012 European debt crisis, and the 2020 COVID-19 market crash, stating, "Currently, due to the three hardships of high inflation, high exchange rates, and high interest rates, the stock market is in a more severe state than during past crises," and added, "I believe short selling should be banned now to protect individual investors and stabilize the stock market."

Regarding short selling's impact on the stock market... please understand the response

In response, Chairman Kim said, "I receive many questions about short selling, but since market measures affect the stock market in terms of timing and manner, I ask for your understanding regarding my reluctance to comment," indirectly refusing to answer.

However, Kang criticized, "There is no will from the financial authorities to crack down on illegal short selling. Since the enforcement of the Capital Market Act in 2010 until June this year, 127 cases of illegal short selling have been detected, but only 56 received warnings and 71 were fined," adding, "This is tantamount to neglecting and even encouraging illegal short selling forces."

Chairman Kim acknowledged, "I am aware that past punishments were weak," but reiterated, "It is difficult to provide a stance on short selling," while Kang raised his voice, saying, "Where is the answer that it is difficult to respond during the audit? Please state your position."

Baek Hye-ryun, Chairwoman of the Political Affairs Committee, also said, "Individual investors do not understand the government's short selling policies at all," and added, "While I understand the market impact of the authorities' stance on whether to ban short selling, individual investors are suffering huge losses in a bear market, so it is time to implement a ban on short selling."