Short Selling Allowed for 'KOSPI 200·KOSDAQ 150' from May 3... Others Extended Indefinitely

Eun Sung-soo, Chairman of the Financial Services Commission, is attending the 4th Innovation Growth BIG3 (Future Cars, Biohealth, System Semiconductors) Promotion Meeting held at the Government Seoul Office in Jongno-gu, Seoul on the 1st. Photo by Moon Ho-nam munonam@

[Asia Economy Reporters Ji Yeon-jin, Park Ji-hwan] From May 3rd, short selling will be allowed on stocks constituting the KOSPI 200 and KOSDAQ 150 indices. Originally, short selling was scheduled to resume on the 16th of next month, but this has been extended by about 50 days with a partial resumption of short selling.

The Financial Services Commission (FSC) held its first emergency meeting on the 3rd and decided to extend the ban on short selling. Following the meeting, FSC Chairman Eun Sung-soo stated in a briefing, "At today's meeting, there was consensus that it is difficult to completely or indefinitely ban short selling, which is a global standard, given our capital market environment connected internationally," adding, "Since there are significant market concerns and worries about the resumption of short selling, we decided to minimize market shocks through a partial resumption."

The FSC resolved to resume short selling starting with stocks included in the KOSPI 200 and KOSDAQ 150 indices. These stocks are familiar to both domestic and foreign investors, and considering their high utilization in linked trading between the derivatives market and the stock market, as well as their large market capitalization and liquidity which limit the price impact of short selling.

The KOSPI 200 accounts for 22% of the total 917 KOSPI stocks and represents 88% of the total market capitalization (2,060 trillion KRW). The KOSDAQ 150 comprises about 10% of the total 1,470 stocks and approximately 50% of the total KOSDAQ market capitalization (392 trillion KRW).

For the remaining stocks, the FSC will decide on the method and timing of resuming short selling later, considering the effects of resumption or ban and market conditions.

The FSC plans to complete system construction along with improvements to the short selling system by May 3rd. From the 6th of next month, penalties and criminal charges can be imposed for illegal short selling, and to prevent attempts at illegal short selling in advance, it has mandated that short selling loan transaction information be stored electronically for five years. Additionally, the detection cycle for naked short selling will be shortened from six months to one month, and detection techniques will be developed to strengthen the identification and monitoring of illegal short selling.

Following the securing of about 2 to 3 trillion KRW worth of loanable shares from securities firms, it is expected that individual investors will be able to engage in short selling once most stocks in the KOSPI 200 and KOSDAQ 150 are secured before the resumption. Chairman Eun emphasized, "We will continuously secure loanable shares through cooperation with various institutions," and added, "We will encourage the participation of all securities firms handling margin loans to continuously improve accessibility and convenience for individual short sellers."

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