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By Kang Dong-wook, Chris Kim and Ugu Choi from Bae, Kim & Lee LLC, a law firm in Korea.
On June 13, 2024, the Financial Services Commission (FSC) extended the temporary complete ban on covered short sales of KRX-listed stocks until March 30, 2025. This ban, which initially commenced on November 6, 2023, was originally set to expire on June 30, 2024.
On the same day, the FSC announced various measures aimed at preventing naked short sales and creating a level playing field for institutional and retail investors.
Highlighting that large-scale naked short sales have been repeatedly detected despite previous short sale reforms, the FSC emphasised the need for strict regulation of short sales and fair treatment for both the institutional and retail investors, given the high retail participation in Korean capital markets.
These new measures announced by the FSC require amendments to the Financial Investment Services and Capital Markets Act of Korea (FSCMA) and its subordinate decrees and regulations. The FSC plans to finalise the necessary amendments by the end of this year and implement the new measures by the end of March 2025.
KEY TAKEAWAYS
• Covered short sales of KRX-listed stocks will continue to be banned until March 30, 2025.
• Any institutional investor (including offshore investors) engaged in short sale trades of KRX-listed stocks exceeding certain thresholds will be required to establish a computerized internal...................... To view our full article Click here
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