Financial Supervisory Service Chief: "Dedicated Illegal Short Selling Investigation Team to Operate in June... Planned Investigations Also to Be Conducted"

Jung Eun-bo, Governor of the Financial Supervisory Service [Photo by Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] The Financial Supervisory Service (FSS) will operate a dedicated short-selling investigation team and take strict measures against illegal activities.

On the 31st, at an executive meeting, Jeong Eun-bo, Governor of the FSS, stated, "Considering investors' complaints that short selling is a 'tilted playing field' favoring foreigners and institutions, and suspicions that investigations into illegal short selling are not being properly conducted, we need to devise institutional improvement measures."

He continued, "In June, we will establish and operate a dedicated short-selling investigation team to further strengthen investigations into short-selling violations and take strict action against illegal short selling."

The dedicated short-selling investigation team plans to first conduct a fact-finding inspection to closely understand the short-selling order methods, stock lending processes, and other procedures. Additionally, it will carry out planned investigations into areas with a high likelihood of short-selling violations, such as intentional naked short selling and unfair trading using it.

In Korea, borrowed short selling, where stocks are borrowed through margin and then sold, is permitted. However, naked short selling, where stocks are sold first without borrowing, is illegal.

For effective investigations, the FSS will cooperate with related organizations such as the Financial Services Commission and Korea Exchange. Furthermore, it plans to actively utilize cooperation with foreign supervisory authorities under the multilateral memorandum of understanding (IOSCO MMoU) concerning consultation, cooperation, and information exchange when investigating foreign investors.

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