Financial Investment Industry Demands "Expansion of Short Selling Resumption"... Go Seung-beom Says "It’s Something That Must Be Done Eventually" (Comprehensive)

[Asia Economy Reporter Ji Yeon-jin] Ko Seung-beom, Chairman of the Financial Services Commission, said on the 30th, "The resumption of short selling is something that must be done eventually," adding, "After a partial resumption, we will analyze the effects and comprehensively review market conditions, COVID-19, and the macroeconomic situation to develop a plan."

Chairman Ko made these remarks to reporters after a meeting with the capital market industry held at the Korea Financial Investment Association in Yeouido, Seoul, on the same day.

Regarding concerns about the fairness of capital market systems and practices such as short selling, he said, "We will form sufficient consensus on the demands of (individual investors) and take a long-term approach to coordinate interests, dividing the tasks and approaching them step by step."

Earlier at the meeting, the financial investment industry suggested that expanding short selling is necessary considering individual investors' accessibility to short selling and market conditions after its resumption. There was also a request to promptly introduce the Business Development Company (BDC) system to make it easier to invest in unlisted innovative companies.

The Korea Financial Investment Association pointed out that the concentration of subscription deposits, which can reach as much as 50 to 80 trillion won due to individual investors' interest in public offering subscriptions, and the increased volatility of household debt are causing disruptions in the capital market, and reported that they will seek to reform the deposit system.

Chairman Ko said, "There are many concerns about the recent overheating of the IPO market and household debt," and added, "We will review various measures to improve the IPO (Initial Public Offering) market system."

He also explained, "The recent increase in household debt is mostly due to loans for actual demand, so there is a problem (in management)," adding, "Regarding loans for actual demand, the amount of jeonse deposit loans and policy mortgage group loans has increased significantly, so we are closely monitoring them." He continued, "While managing the total amount of household debt, we are considering various ways to find improvement measures for loans for actual demand."

Regarding Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki's mention of 'loans within repayment capacity' for actual demand at the macroeconomic and financial meeting that morning, Chairman Ko said, "Loans within repayment capacity should be the focus of household debt management going forward," emphasizing, "Although the DSR (Debt Service Ratio) regulation was mentioned, it is important overall that borrowing within repayment capacity and the practice of repaying from the beginning are established."

He also expressed concerns about the recent surge in 'debt investment' (borrowing to invest). Chairman Ko said, "The recent rapid increase in securities firms' margin loans is a problem, and it is natural to take measures on that part," adding, "Since securities firms have said they will manage it overall, we will observe the situation, but if supplementary measures are needed, we will devise them."

In his opening remarks, he said, "Concentration and excessive leverage have always caused problems for financial stability, disrupted the balance between finance and the real economy, and acted as factors inflating asset markets," adding, "It is our responsibility, yours and mine, to be alert to even small warning signs and respond in advance."

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