Detection of Illegal Short Selling Aims to Restore Market Trust: Watchdog Leader
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Synopsis
On March 19, South Korea's financial watchdog chief announced a new system to detect illegal short selling, aiming to restore market confidence as the ban on this practice is set to be lifted soon. The agency plans to enhance market access for foreign investors and protect shareholders effectively.
Key Takeaways
- Implementation of a detection system for illegal short selling.
- Plans to lift the temporary ban on stock trading.
- Fines imposed on global investment banks for naked short selling.
- Efforts to facilitate foreign investor access to the market.
- Significant increases in South Korean stock values.
Seoul, March 19 (NationPress) The head of South Korea's financial regulatory authority stated on Wednesday that a newly implemented system for identifying illegal short selling is expected to restore market confidence as the nation prepares to lift its temporary prohibition on this stock trading activity at the end of the month.
During a demonstration of the monitoring system, Lee Bok-hyun, the governor of the Financial Supervisory Service, mentioned that his organization, along with the stock market operator, will intensify efforts to enhance the financial market by facilitating foreign investor access and implementing measures to better protect shareholders.
The temporary ban on stock short selling was introduced in November 2023 following the revelation of multiple instances of naked short selling involving various global investment banks, as reported by Yonhap news agency.
The watchdog imposed a total of 83.6 billion won (approximately US$57.8 million) in fines on 13 global investment banks for their illicit short selling activities.
Earlier, the financial regulator announced plans to permit short selling on all publicly traded companies in South Korea.
Prior to the ban, only 350 listed companies, specifically those comprising the KOSPI 200 index and the KOSDAQ 150 index, were eligible for short selling.
In the meantime, South Korean stocks experienced a significant increase late Wednesday morning, propelled by gains in top-cap Samsung Electronics and other technology shares.
The benchmark Korea Composite Stock Price Index (KOSPI) climbed by 20.65 points, or 0.79 percent, reaching 2,632.99 by 11:20 a.m.
The index opened positively, despite declines on Wall Street the previous night, maintaining momentum due to strong buying from foreign and institutional investors.
Market leader Samsung Electronics surged 2.08 percent, while chip giant SK Hynix rose 1.72 percent.
Leading battery manufacturer LG Energy Solution saw a 2 percent increase, and the top steelmaker POSCO Holdings spiked by 3.28 percent.
Top automaker Hyundai Motor grew by 1.25 percent, with its affiliate Kia edging up 0.1 percent.
Conversely, biotechnology shares declined, with major firm Samsung Biologics dropping 0.28 percent and Celltrion decreasing by 0.11 percent.
