Korea Securities Finance Expands Available Stock Lending for Individual Short Selling to 1.4 Trillion Won

[Asia Economy Reporter Oh Ju-yeon] Korea Securities Finance proposed a plan to increase the volume of individual stock lending from around 71.5 billion KRW as of the end of February to 1.4 trillion KRW, a 20-fold increase. This comes in response to concerns that the proportion of individual short-selling transaction amounts is low compared to foreigners and institutions. Securities Finance plans to focus on expanding the channels through which individuals can purchase stocks and the number of stocks available for borrowing.

On the 2nd, Kim Tae-wan, head of the Planning Department at Securities Finance, announced this at the "Improving Accessibility to Individual Stock Lending" forum hosted by Securities Finance at the Bankers Hall in Jung-gu, Seoul.

According to the announcement, the proportion of individual short-selling transaction amounts is only 1.1%, while foreigners and institutions account for 62.8% and 36.1%, respectively. Furthermore, the scale of stocks borrowed by foreigners and institutions for short-selling is 67 trillion KRW, whereas individuals borrow only 23 billion KRW.

The reason individuals are marginalized in the short-selling market is primarily due to limited channels for borrowing stocks. Individuals can short-sell by borrowing stocks from Securities Finance through securities firms. The six securities firms handling stock lending are NH Investment & Securities, Shinhan Financial Investment, Kiwoom Securities, Daishin Securities, SK Securities, and Yuanta Securities. Consequently, investor accessibility is limited, and there is a shortage of stock lending resources.

Securities Finance proposed measures to revitalize stock lending, such as increasing the number of securities firms handling stock lending so that stocks can be easily borrowed from any securities firm, and enabling each securities firm to check the available lending quantity per stock through a real-time integrated trading system.

It is analyzed that under these measures, the volume of lendable stocks could increase about 20 times from the current level to 1.0 trillion KRW.

Kim, who presented at the forum, stated, "Securities Finance will build a real-time integrated trading system, called the 'Korean-style K-Stock Lending System,' that allows securities firms handling stock lending to immediately check the available lending quantity per stock, thereby dramatically improving the efficiency of stock lending resource utilization." However, he emphasized, "At the same time, investor protection must be strengthened as individual short-selling expands."

This forum was organized as part of the financial authorities' efforts to devise measures to activate individual short-selling. The Financial Services Commission plans to review the opinions proposed at this forum and announce the final plan to promote individual short-selling.

This content was produced with the assistance of AI translation services.