A Stock Lending System to Be Introduced for Individual Investors
Financial Services Commission Chairman Eun Sung-soo remarked on March 3 that the government’s decision to lift its temporary short selling ban on May 3 had to be made for a minimum impact on the stock market.
“We are making efforts in various ways, including thorough market monitoring and the introduction of fines and criminal punishments, and every illegal short selling will be detected and punished,” he said, adding, “To this end, naked short selling inspection will be conducted every month, instead of every six months, and we are working on new monitoring techniques in cooperation with the Korea Exchange.”
He also said that short selling by Mini KOSPI 200 market makers, that is, securities companies will be banned and a new uptick rule will be implemented so that each market maker cannot submit an asking price equal to or lower than the immediately previous price and a stock price decline attributable to short selling can be prevented.
Also, the commission is planning to allow short selling by individual investors. It is going to prepare a stock lending system of two trillion won to three trillion won by May 3 to this end. The chairman also remarked that the revised Financial Investment Services and Capital Markets Act for such fines and punishments will become effective on April 6 and the government’s decision reflected this schedule as well.