Reorganization of Short Selling Lending Brokerage System... Priority Application to 'LP·MM'

Joint TF on Short Selling System Improvement Holds Briefing for Securities Lending Brokerage Service Participants
"System Overhaul for Borrowed Short Selling Securities Lending Transactions"

As a follow-up measure to limiting the loan short-selling securities lending transaction period, the related securities lending intermediary institution systems will be revamped. This will be applied first to liquidity providers (LP) and market makers (MM) who are allowed to conduct short-selling exception transactions.

The Korea Financial Investment Association announced on the 16th that it held a briefing session for participants in the securities lending intermediary service at the Financial Investment Association Bulls Hall the previous day, together with the Korea Securities Depository and Korea Securities Finance, in accordance with the "Short Selling System Improvement Plan" announced last month.

The Korea Securities Depository, Korea Securities Finance, and the Korea Financial Investment Association, which provide securities lending intermediary services, formed a joint task force (TF) team earlier this month to discuss related regulations and system revamp schedules.

The briefing session was organized to explain the system revamp plan of the joint TF to major participants, collect opinions, and reflect them in the schedule for system development and testing. Approximately 100 stakeholders, including 29 securities firms, intermediary institutions, and securities lending participants, attended.

The joint TF decided to apply the system revamp plan of the intermediary institutions first within this year to liquidity providers and market makers allowed to conduct short-selling exception transactions. The repayment period for securities lending transactions will be limited to within 90 days from the initial repayment period, and the total repayment period including extensions will be limited to within 12 months. This measure will apply to new securities lending transactions concluded after the system implementation date.

Representatives from each intermediary institution introduced the system development details related to the initial transaction period and limits on the number of repayment period extensions during the briefing session, urging participants to respond actively. The joint TF plans to hold participant briefing sessions by industry, including securities firms, asset management companies, and foreign investors (standing agents), in the third quarter to reflect improvements to the loan short-selling system.

Baek Sang-tae, Head of the Securities Settlement Division at the Korea Securities Depository, said in his opening remarks, "We will support the government's short-selling system improvement policy without any setbacks through the improvement of intermediary institution systems."