Real-Time Order Monitoring Through Time-Based Balance Calculation
Preemptive Blocking of Orders Exceeding Balance
The Korea Exchange will operate the Short Selling Central Monitoring System (NSDS) on the 31st to continuously monitor short selling transaction details in line with the full resumption of short selling.
Lee Bok-hyun, Governor of the Financial Supervisory Service, and Jung Eun-bo, Chairman of the Korea Exchange, are watching a demonstration of the illegal short selling detection using the Short Selling Central Inspection System (NSDS) at the "Short Selling Electronic System Construction Demonstration" held at the Korea Exchange in Yeouido, Seoul. Photo by Yonhap News
According to the Korea Exchange on the 30th, the NSDS is a system that can immediately detect illegal short selling by continuously monitoring the sell orders of short selling investment corporations through a function that calculates balances by time period.
In addition, short selling investment corporations calculate the sellable balance by stock for each short selling registration number in real time through an internal balance management system to preemptively block orders that exceed the balance.
Earlier, the Financial Services Commission announced improvements to the short selling system in June last year and incorporated detailed measures to prevent naked short selling into the Capital Markets Act and its subordinate regulations. In December of the same year, the Financial Supervisory Service completed the development of the short selling registration number issuance system.
According to the revised Capital Markets Act, 107 corporations are known to meet all the criteria for naked short selling prevention measures and will be eligible to resume short selling starting from the 31st. Among them, 21 corporations have adopted computerized short selling methods; these corporations have established internal balance management systems and met the review requirements of the Financial Supervisory Service and the Exchange.
They have also completed confirmation of the adequacy of internal balance management systems and internal control standards from investment brokerage firms entrusted with short selling securities.
The Financial Supervisory Service, the Exchange, and the Korea Financial Investment Association have established a cooperative system among related institutions to swiftly stabilize the short selling computerized system and plan to continuously promote system advancement.
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