Vice Chair Kim So-young: "Short Selling Ban May Be Extended"

On the 16th, Min Party-Government Council Holds Meeting on Short Selling System Improvement

Kim So-young, Vice Chairman of the Financial Services Commission, and Lee Bok-hyun, Governor of the Financial Supervisory Service, are conversing at the Min-Dang-Jeong Council on Directions for Improving the Short Selling System to Restore Investor Confidence held at the National Assembly on the 16th. Photo by Kim Hyun-min kimhyun81@

Kim So-young, Vice Chairman of the Financial Services Commission, stated on the 16th that if the measures to improve the short-selling ban are insufficient, the ban period could be extended.

Vice Chairman Kim said in an interview with reporters immediately after the 'Directions for Improving the Short-Selling System to Restore Investor Confidence' meeting held at the National Assembly that "(Regarding the short-selling ban deadline) we initially set it until the end of June next year, but we plan to assess the market trends and whether the system improvements are sufficient at that time to decide whether to resume short-selling."

He explained, "We will make our best efforts to resume short-selling by the end of June if possible," but added, "If the system improvements are not sufficient, an extension may be considered."

He also mentioned plans to hold a session to explain the reasons for the short-selling ban to overseas investors. Vice Chairman Kim said, "There are concerns that foreign investors are withdrawing from the capital market, but the short-selling system reform is aimed at enhancing and strengthening trust in the capital market," adding, "I believe that if trust in the capital market builds up in the mid to long term, many foreign investors may enter in the future."

He continued, "Market makers and liquidity providers are not causing market instability but may actually help stabilize it. We are comprehensively reviewing these aspects."

He further stated, "If market makers or liquidity providers are engaging in illegal naked short-selling, which individual investors worry about, they will be severely punished, and we plan to check if such incidents occur."

Meanwhile, the People Power Party and the government held a meeting at the National Assembly on the morning of the same day to discuss directions for improving the short-selling system. The main points included limiting the short-selling repayment period for foreigners and institutions (stock lending) to 90 days, the same as individuals, and lowering the collateral ratio for individual short-selling from the existing 120% to 105%.

Earlier, the Financial Services Commission announced a temporary full ban on short-selling from the 6th of this month until June 28 of next year under the pretext of discussing system improvements. This move was criticized as a short-selling ban measure implemented as part of the People Power Party's general election strategy along with the incorporation of Gimpo City into Seoul.