FSS: "Stock Market Volatility Rising... Full Efforts to Block Illegal Short Selling"

As volatility in the stock market increases due to the situation in the Middle East, the Financial Supervisory Service has requested securities companies to strictly manage their order systems in order to prevent illegal short selling.

On the afternoon of March 13, the Financial Supervisory Service announced this during an emergency meeting with securities firms participating in the central short selling inspection system (NSDS), presided over by Lee Seungwoo, Deputy Governor for Disclosure and Investigation at the Financial Supervisory Service.

Deputy Governor Lee stated, "With stock market volatility expanding due to the recent Middle East situation, I strongly urge rigorous compliance management so that short selling does not undermine market trust."

Deputy Governor Lee emphasized the thorough management of short selling at the order stage. He noted that illegal naked short selling can be prevented by calculating available balances accurately and implementing functions to block sell orders that exceed available balances.

He also called for strengthening internal controls related to short selling. Since many recent cases of naked short selling have resulted from simple mistakes or errors, he stressed the need to review compliance monitoring functions.

Additionally, he requested enhanced management of electronic systems and stronger market surveillance. Given the nature of short selling systems, which process large volumes of data simultaneously, system failures can lead to violations of short selling regulations.

The Financial Supervisory Service plans to swiftly investigate and take strict action against short selling that disturbs the market.

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