Lee Bok-hyun "Reviewing Various Options for Short Selling... Must Explain Resumption Status in June"

"Even if not resuming, the timing and other details must be communicated"

Lee Bok-hyun, Governor of the Financial Supervisory Service, said regarding the resumption of short selling, "We are reviewing various options concerning the possibility, method, and timing of resuming short selling."

Lee Bok-hyun, Governor of the Financial Supervisory Service, is attending and speaking at a meeting for the coexistence and development of companies and shareholder activism held at the Korea Financial Investment Association in Yeouido, Seoul on the 18th. Photo by Jo Yong-jun jun21@

Governor Lee appeared on KBS2's 'Economic Concert' on the 23rd and stated, "By June, we need to explain whether short selling will resume, the timing, and if it does not resume, the criteria for resuming short selling in the future."

In response to recent controversies over remarks about resuming short selling, Governor Lee explained, "I expressed a personal desire that it would be good to partially resume short selling, and even if it cannot be done, the intention was to increase predictability about when and how it could be resumed."

Earlier, after an Invest K-Finance investor relations (IR) event held recently in New York, USA, Governor Lee told reporters, "My personal desire or plan is to partially resume short selling in June," adding, "Even if there are technical or institutional shortcomings, it is necessary to communicate with the market that we are listening to stakeholders' opinions and pushing for resumption within a certain time frame."

Regarding this, the Presidential Office dismissed the remarks the day before, stating, "Short selling will not resume until the illegal short selling issue is resolved and a system that investors can trust is established," and "The Governor of the Financial Supervisory Service's remarks are at the level of personal hope."

Following the ban on overseas direct purchases, concerns arose that there might be policy confusion between government ministries and the Presidential Office.

Governor Lee said, "The principle of making decisions related to short selling after establishing the system has not changed," and added, "Regarding value-up, there are many requests from foreign investors asking for a schedule on when short selling will be resumed."

In response to concerns that if short selling partially resumes mainly for large-cap stocks, large-cap stock prices might fall and theme stocks might become rampant, he explained, "If the electronic system is fully prepared and short selling is conducted on blue-chip stocks at the time of resumption, it can act in a way that raises stock prices or significantly increases trading volume."

Regarding criticism that the government's value-up program lacks enforceability, Governor Lee said, "Initially, it will be a voluntary shareholder-friendly policy, and later, an index will be created so that pension funds and asset management companies can invest."

He emphasized that there is no possibility of a continued financial sector crisis due to the recently announced financial authorities' real estate project financing (PF) normalization plan.

Governor Lee said, "Because we have managed risks intensively over a long period, there is no possibility of concentration or insolvency due to the PF normalization plan," adding, "The core is to prevent 'financial paralysis' and create a virtuous cycle structure for normal business sites."