Short Sellers Required to Report Transactions
The Financial Services Commission announced on Sept. 29 that the Regulations on Financial Investment Business would be revised next month so that details on stock lending and borrowing for the purpose of covered short selling must be reported to the Financial Supervisory Service on the 90th day of the transaction.
The commission decided to revise the regulations as many individual investors suspect that institutional investors and foreign investors maintaining their short selling positions for long after stock borrowing may have purposes other than short selling.
According to the commission, the content of the revision also includes reporting outstanding short selling positions together with lending and borrowing information and adjusting the minimum short selling collateral applied to individual investors from 140 percent to 120 percent.
According to industry sources, the financial authorities are preparing to operate their stock market stabilization fund with financial markets fluctuating and are considering a complete ban on short selling in the event of further instability. The fund exceeding 10 trillion won was raised by the authorities, securities companies and banks in March 2020, when COVID-19 reached its peak, but was not actually used as the stock market recovered.