[2023 National Audit] Financial Services Commission Chairman: "Building an IT System to Prevent Illegal Short Selling Is Not Easy"

Financial Services Commission Chairman Kim Ju-hyun is responding to lawmakers' questions at the Political Affairs Committee's audit held at the National Assembly on the 11th. Photo by Kim Hyun-min kimhyun81@

Kim Ju-hyun, Chairman of the Financial Services Commission, stated on the 11th that it is difficult to establish a computerized system to prevent illegal short selling.

On the same day, during the National Assembly's Finance and Economy Committee's audit of the Financial Services Commission, in response to a question from Yoon Joo-kyung of the People Power Party, who emphasized the need to eradicate illegal short selling before discussing the full resumption of short selling, Chairman Kim said, "It is not easy."

According to Yoon's office, the Securities and Futures Commission has taken action on 112 cases of illegal short selling transactions over the past five years. Among these, foreigners accounted for 74%. However, only two cases were confirmed by the Securities and Futures Commission to have intentional wrongdoing among those sanctioned.

Regarding this, Representative Yoon pointed out that although the rest were concluded to be due to errors or mistakes, investors find it hard to accept this easily. This is the background behind calls for the establishment of a computerized system to prevent illegal short selling.

In response, Chairman Kim said, "To build a real-time computerized system, it is necessary to accurately understand how securities lending transactions occur, but since there are various purposes for transactions and different platforms such as phone or email are used, it is difficult to grasp them in real time," adding, "Even if understood, there is no technical way to enforce it."

He further stated, "In a country like ours with a high proportion of foreign investors and significant importance, I am not confident that creating such a complex and difficult system, which no other country implements, is truly a policy to protect individual investors."