Global Investors Urge Full Resumption of Short Selling for Korea's Inclusion in MSCI Developed Markets Index

[Image source=Yonhap News]

[Asia Economy Reporter Ji Yeon-jin] Global investors have pointed out that South Korea needs to increase regulatory predictability, including the full lifting of the short-selling ban, in order to be included in the Morgan Stanley Capital International (MSCI) Developed Markets Index.

The Asia Securities Industry & Financial Markets Association (ASIFMA), which has 160 global investors and financial institutions as members worldwide, stated in a press release on the 6th, "Regardless of which candidate wins the South Korean presidential election on the 9th, key issues hindering the development of South Korea's financial industry must be resolved for inclusion in the MSCI Developed Markets Index."

The association identified the top priority as enhancing regulatory transparency and predictability throughout the legislative, administrative, and judicial processes in the South Korean capital market. It pointed out that the short-selling ban should be fully lifted and that the foreign exchange market system should be improved to facilitate investments by global investors.

The association said, "Korean regulatory authorities should sanction abnormal trading but strengthen regulatory transparency so that global investors can actively engage in investment activities without concerns about unfair sanctions," citing the recent investigation into unfair trading by market makers as a representative example of regulatory opacity.

In September last year, the Financial Supervisory Service (FSS) announced its intention to impose fines totaling 48 billion KRW on nine domestic and foreign securities firms participating as market makers for market disorderly conduct. After the FSS's fine notification, securities firms ceased their market-making activities, which blocked liquidity supply for stocks with sluggish trading.

The association emphasized, "Even months after the fine notification, whether violations occurred has not been properly proven, and the suspension of market-making activities has not been resolved for a long time," adding, "Market-making activities have long been normal trading activities in other developed markets, and Korea's opaque and unpredictable regulations hinder active investment by global investors."

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