'2nd Short Selling Forum' Held at Exchange on 25th
Plan to Establish IT System to Prevent Illegal Short Selling Unveiled
Attention on Whether Retail Investors' Complaints Will Be Addressed
The second open discussion session with individual investors was held on the 25th at the Korea Exchange Seoul Office Conference Hall. Lee Bok-hyun, Governor of the Financial Supervisory Service, is delivering the opening remarks. Photo by Heo Young-han younghan@
Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), will unveil plans for the computerization of short selling and listen to policy suggestions from individual investors at the '2nd Short Selling Forum' on the 25th. With expectations that the Financial Services Commission may review the resumption of the short selling system as early as June, attention is focused on whether this computerization plan will be a sufficient alternative to quell individual investors' dissatisfaction.
The FSS will hold the 2nd Short Selling Forum from 10 a.m. at the Korea Exchange Conference Hall in Yeouido, Seoul. This event comes about six weeks after the first forum held in mid-March. Governor Lee had previously expressed his intention to directly hear individual investors' opinions on short selling during a KBS current affairs program in February.
In his opening remarks, Governor Lee stated, "I hope that the establishment of this illegal short selling prevention computerized system will prevent any further unproductive debates," adding, "To this end, the financial authorities will listen carefully to the opinions of individual investors and the securities industry and reflect them in finalizing the plan."
The FSS, Korea Exchange, Korea Securities Depository, and Korea Securities Finance Corporation launched a task force (TF) last November to develop the computerization plan for short selling. Initially, two to three multiple proposals were considered, but after exchanging opinions with overseas investment banks (IBs) participating in the TF, the final plan was confirmed. The core of the system is to implement a digital process where ▲ all institutional investors reporting short selling balances verify the presence of naked short selling through the system 'before placing orders,' and ▲ the 'Illegal Short Selling Central Blocking System (NSDS)' re-verifies all orders 'after placing orders.' While individual investors initially urged for the complete blocking of naked short selling from the order stage, overseas IBs expressed that they could not accept this.
In addition to the computerization plan for short selling, the FSS also gathered opinions on the policy direction of the capital market. Governor Lee emphasized, "I believe no one would disagree on the need to revitalize the capital market and enhance stock market value," adding, "Capital market revitalization can only be achieved when the authorities' policy efforts, companies' willingness to change, and market participants' interest come together." He also requested related policy suggestions, noting, "I understand that individual investors are presenting various opinions on the financial investment income tax through national petitions."
The forum includes participants such as Jung Ui-jung, President of the Korea Stock Investors Association; Lee Sang-mok, CEO of the small shareholder platform 'ACT'; YouTubers Jeon In-gu and Park Dong-ho; as well as securities industry experts from NH Investment & Securities and Timefolio Asset Management. They will share opinions on key agenda items including 'computerization and institutional improvement plans for short selling' and 'major capital market issues' such as corporate value-up programs and financial investment income tax.
The financial supervisory authorities plan to finalize and promote the establishment of the illegal short selling prevention computerized system based on the opinions raised during the forum. They will also directly hear overseas IBs' opinions in Hong Kong in May. Open forums on the topic of short selling will continue to be held concurrently.
Meanwhile, regarding the timing of the resumption of the currently banned short selling, the financial authorities are exercising caution. The Financial Services Commission stated last month, "No decision has been made on the timing and scope of the resumption of short selling," adding, "We will make judgments by observing overall conditions such as market trends and improvements to the short selling system."
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