[2021 National Audit] Kim Han-jung "Institutional and Foreign Short Selling Borrowing Period Should Be Reduced to 60 Days"

[Asia Economy Reporter Park Ji-hwan] On the 7th, Kim Han-jung, a member of the Democratic Party of Korea, argued that "the short-selling borrowing period for institutions and foreigners should be reduced to 60 days, and the extension of the maturity period should be restricted for a certain period upon maturity."

According to the Financial Services Commission, since the resumption of short-selling on May 3rd, foreigners accounted for 76% of the total short-selling market transaction volume. In contrast, individual investors accounted for only 1.9%.

Recently, as controversy grew over the short-selling market still being a tilted playing field, the Financial Services Commission decided to expand individual investors' access to short-selling by increasing the borrowing period from 60 days to 90 days and allowing additional maturity extensions upon maturity.

Kim Han-jung pointed out, "Although the short-selling system is intended to supply liquidity to the market and prevent overheating, the top short-sold stocks are concentrated in those where individual investors are actively buying," adding, "Ultimately, it can be interpreted that foreigners intend to profit at the expense of individual investors."

Among KOSPI stocks, the stock most short-sold by foreigners was Kakao, with a short-selling volume reaching 2.086 trillion KRW. Samsung Electronics (1.9398 trillion KRW), HMM (1.8369 trillion KRW), SK Hynix (1.4208 trillion KRW), and LG Chem (1.3012 trillion KRW) followed.

Kim said, "In a situation where foreigners seem to be playing a zero-sum game with individuals, it is questionable whether expanding individual investors' access to short-selling is a desirable policy direction," and proposed, "Rather, it is preferable to reduce the short-selling borrowing period for institutions and foreigners to 60 days, the same as individuals, and to restrict maturity extensions for a certain period upon maturity."

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