[Asia Economy Reporter Lee Jung-yoon] Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), stated on the 6th that while he holds the general view that short selling is necessary for the smooth functioning of the market, a ban can be imposed if there is a sudden environmental change.
After concluding the '1st Bank-Linked Business Restructuring Strategy Meeting' at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul, Governor Lee was asked whether he is coordinating opinions with the Financial Services Commission regarding short selling. He replied, "I have the general view that various mechanisms present in advanced countries are necessary for the smooth operation of the market. However, if there is a significant market concentration or psychological instability caused by a sudden environmental change, there is a principled consideration that any measures can be used without exception."
He continued, "If some general indicators deviate significantly compared to our fundamentals, or if there is a consensus within reasonable limits, there is a fundamental premise that such measures can all be used."
He added, "The principled stance and the mindset that any measures can be taken to address market concentration. However, the three principles that it must be done under rational and logical review are shared not only by the FSS but also by the Financial Services Commission and the Ministry of Economy and Finance."
Furthermore, regarding Samsung Securities, which is accused of lending over 10 billion won to executives and employees of affiliated companies, Governor Lee said, "The disciplinary committee procedure has been completed," and "We proceeded with decision-making on matters that could cause controversy as quickly as possible and forwarded them to the Financial Services Commission." He also stated, "We tried to handle parts that could be criticized as quickly as possible after the change of the FSS Governor or the responsible staff. In that process, we proceeded by setting principles without hesitation."
Earlier, in 2020, Park Yong-jin, a member of the Democratic Party of Korea, raised suspicions during a national audit that Samsung Securities lent over 10 billion won to 13 registered executives of affiliated companies from 2015 to 2018. According to the Capital Markets Act, financial investment companies are only allowed to provide credit within the range of the lesser amount between the annual salary and 100 million won to major shareholders or related parties.
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