First Meeting of the Task Force for Building a No-Borrow Short Selling Prevention System... "Need to Establish Practical Improvement Measures"

Financial Supervisory Service, Yeouido, Seoul. Photo by Jinhyung Kang aymsdream@

The Financial Supervisory Service and Korea Exchange announced on the 23rd that they have formed a 'Task Force (TF) for the Establishment of a No-Short-Selling Computer System' together with the Korea Financial Investment Association and industry stakeholders, and held the first meeting.

This TF aims to discuss specific application plans for building a computer system to prevent no-short-selling, as outlined in the 'Short Selling System Improvement Direction (Draft)' announced at the Private-Public Policy Council. It will also specifically discuss the establishment of internal computer systems for institutional investors engaging in short selling and the realization of a real-time blocking system against no-short-selling. Furthermore, the TF plans to hold meetings at least once a month and operate continuously until the computer system is established.

Ham Yong-il, Deputy Director of Capital Market Accounting at the Financial Supervisory Service, stated, "Although there have been several discussions regarding the establishment of computer systems related to short selling, this time it is necessary to prepare practical improvement measures as the reality of illegal short selling has been confirmed. Institutional investors and others should establish an internal control environment to prevent illegal short selling on their own, and furthermore, active consideration should be given to realizing a real-time blocking system that all market participants, including individual investors, can trust."

He also urged to resolve the controversies over the three shortcomings of short selling?imbalance, insufficiency, and unfairness?and to foster a sense of responsibility for restoring trust in the capital market.

Yang Tae-young, Vice President of Korea Exchange, explained, "We will spare no effort in active participation and support for the operation of the TF for the establishment of the computer system," and added, "We ask the TF to present constructive discussions and alternatives to prepare reasonable measures that market participants, including individual investors, can accept."

A Financial Supervisory Service official stated, "We plan to form a working-level team for the TF on the establishment of the no-short-selling computer system and hold TF meetings biweekly to proceed with discussions," and added, "We will newly establish a 'Short Selling Computer System Support Team' to actively support this TF."