Kim Byunghwan: "Short Selling Resumes Next Month for All Stocks... Overheating Designation System to Mitigate Shock"

"I believe it is time for a full resumption." Kim Byung-hwan, Chairman of the Financial Services Commission, expressed his position that short selling will be resumed for all stocks next month. Given concerns that the resumption of short selling could cause excessive shocks to individual stocks, there are plans to temporarily expand the 'Short Selling Overheated Stocks Designation System' as a buffer measure.

Financial Services Commission Chairman Kim Byung-hwan is speaking about recent financial issues at the monthly press corps meeting held at the Government Seoul Office in Jongno-gu, Seoul on the 24th. 2025.2.24 Photo by Jo Yong-jun

On the morning of the 24th, Chairman Kim attended a regular press briefing at the Government Seoul Office in Jongno-gu, Seoul, stating, "Unless there are major issues, the plan is to fully resume short selling on March 31." He added, "(Until March 31) we will continue to check whether the system operates stably and properly," and said, "If resumed, it will apply to all stocks. It is difficult to find a reason not to include all stocks."

Previously, just before the full ban in November 2023, short selling was only allowed for 350 stocks included in the KOSPI 200 and KOSDAQ 150 indices, but this will be expanded to all stocks. Chairman Kim explained, "At that time, as COVID-19 was easing, the resumption was partial. Concerns about unfair trading were considered," and added, "This time, we also have to consider external credibility and have been working for over a year to establish a system to detect unfair trading."

He also noted that while the impact of resuming short selling on the overall domestic capital market is expected to be "short-term based on past cases," he acknowledged the market's concerns that short selling could be concentrated on individual stocks. Accordingly, there are plans to temporarily expand the short selling overheated stocks designation system, which prohibits trading of stocks with a surge in short selling the following day. He explained, "For about one or two months, we will temporarily relax the criteria and requirements so that more stocks can be designated as overheated stocks," calling it "a supplementary measure to somewhat mitigate shocks to individual stocks."

Chairman Kim also expressed regret over the slow progress in the National Assembly regarding amendments to the Capital Markets Act aimed at protecting small shareholders. While both ruling and opposition parties agree on the broad goals of capital market value enhancement and shareholder protection, the ruling party advocates for targeted amendments through the Capital Markets Act, whereas the opposition insists on amendments to the Commercial Act, which would also apply to unlisted companies. He said, "There are concerns from the business community and companies about the side effects of the Commercial Act amendments, so I hope the National Assembly will fully consider this," adding, "I hope there will be an opportunity for in-depth discussion on which approach?Capital Markets Act or Commercial Act?can better protect ordinary shareholders while minimizing side effects of legal amendments."

Regarding the second phase of virtual asset legislation, he presented a roadmap, saying, "Work related to the second phase of legislation has now begun," and "We plan to submit the second phase legislative bill to the National Assembly in the second half of the year." He added, "We will speed up the process to avoid delays."