Short Selling Partial Resumption D-1, Park Yong-jin Urges "Accelerate Introduction of Short Selling Electronic System"

[Asia Economy Reporter Oh Joo-yeon] On the 2nd, Park Yong-jin, a member of the Democratic Party of Korea, stated that the introduction of a short-selling electronic system must be expedited, one day before the partial resumption of short selling.

Park Yong-jin, Democratic Party of Korea lawmaker. / Photo by Yoon Dong-joo doso7@

On that day, Park said on his Facebook, "Short selling is a system with both positive and negative functions, but this is only true when illegal activities are eradicated. The reality is that individual investors in our country still perceive short selling as a tilted playing field, an unfair game," emphasizing the need to introduce a short-selling electronic system to eradicate illegal short selling.

Short selling is an investment method where stocks not owned are borrowed and sold, then repurchased at a lower price to return the borrowed shares, profiting from the price difference. The financial authorities banned short selling from March 16 last year, when stock prices plummeted due to the COVID-19 pandemic. The ban was extended twice, and from the 3rd, short selling will partially resume, allowing it for stocks included in the KOSPI 200 and KOSDAQ 150 indices.

Park, who had expressed opinions on extending the short-selling ban, voiced concerns about illegal short selling ahead of this partial resumption.

Park pointed out, "The financial authorities have strengthened the detection system for illegal short selling and introduced fines and penalties before the resumption of short selling, but experts say that the biggest variable in the domestic securities market in May is 'short selling,' and various opinions are being presented." He argued that the amendment to the Capital Markets Act, which includes the introduction of the short-selling electronic system, must be passed promptly.

He said, "Despite the longest-ever 'short selling ban' of one year and two months, it is truly regrettable that a solid institutional backing for a capital market free of illegal activities has not been established," adding, "To eradicate illegal short selling, the 'short-selling electronic system' must be introduced to input and verify all short-selling transactions electronically."

However, he lamented, "Although the amendment to the Capital Markets Act was proposed on February 4, it has not been discussed even once in the Legislation and Judiciary Committee's subcommittee since then," reiterating, "The key point to eradicating illegal short selling is precisely the 'introduction of the short-selling electronic system.'" He added, "The bill must be discussed and passed promptly to establish an institutional foundation that can fundamentally block illegal short selling as soon as possible."

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