Meeting Between Ruling Party and Government Amid 'Gongmaedo Controversy'... Review of Resumption After System Introduction

On the 29th, ahead of the end of the short-selling ban period and amid ongoing controversy over the resumption of short-selling, Eun Sung-soo, Chairman of the Financial Services Commission, is speaking at the Political Affairs Committee party-government consultation held at the National Assembly. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Ji Yeon-jin] Ahead of the resumption of short selling in March, as individual investors strongly demand an extension, the government and the ruling party held a closed-door party-government consultation, drawing attention to the discussion content.

According to the National Assembly and financial authorities on the 30th, members of the Democratic Party of the National Assembly's Political Affairs Committee met with six related agencies, including the Financial Services Commission, the day before to receive a New Year's business report. At this meeting, along with an overall report on the Political Affairs Committee's current issues, discussions on short selling, which has attracted significant market interest, also took place. Although no conclusion was reached regarding the extension or timing of short selling, concerns about excessive market anxiety over short selling were pointed out. It was also agreed that since institutional improvements related to short selling have been made, the market needs to stabilize accordingly. In particular, opinions were raised that institutional improvements are necessary for individual investors' participation in the short selling market.

Some suggest that a plan to resume short selling after the introduction of a computerized system to activate individual stock lending (daejoo) is being strongly considered.

Kim Byung-wook, the ruling party's secretary of the Political Affairs Committee, stated, "Even though the activation of individual stock lending was announced, without a computerized system, individuals could not borrow stocks through securities companies. They said they would ensure monitoring, but without a monitoring system, it is not possible," adding, "If these practical aspects are supplemented and institutional improvements are well established on the ground, resuming short selling will be possible."

The Financial Services Commission and Korea Securities Finance are pushing to increase the number of securities companies participating in the stock lending market that lends stocks for short selling to individuals from the current six to ten companies as a priority. Currently, NH Investment & Securities, Shinhan Financial Investment, Kiwoom Securities, Daishin Securities, Yuanta Securities, and SK Securities are participating.

The Political Affairs Committee plans to begin full discussions on extending the short selling ban through business reports from related agencies starting early next month.

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