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Short selling should expand: FSS chief

Published: 20 Feb. 2025, 17:39

Lee Bok-hyun, governor of the Financial Supervisory Service (FSS), speaks during a conference at the Korea Exchange (KRX) in Seoul on Feb. 20, 2025. [YONHAP]

The chief of Korea's financial watchdog voiced a need Thursday to expand the scope of stock short selling to allow the practice on more stocks as the country prepares to resume the scheme next month.

The country imposed a temporary ban on the practice in November 2023 after the Financial Supervisory Service (FSS) uncovered a series of naked short-selling violations involving several global investment banks.

“Short selling needs to be resumed on more diverse stocks in order to win market confidence,” FSS Gov. Lee Bok-hyun said in a conference.

Before the short selling ban, a total of 350 listed firms, namely the constituents of the Kospi and Kosdaq, had been subject to short selling.

He said a series of fairness and transparency-focused measures for the country's capital market will be consistently implemented going forward to boost market confidence.

The computerization of a short selling system, coupled with the planned launch of the country's secondary stock exchange, will help boost investor confidence, he stressed.

“We will focus on the setup of a transparent, fair paradigm for the capital market,” Lee said.

An alternative trading system will set sail next month for greater efficiency and convenience in the trading of securities.

Currently, the Korea Exchange (KRX), launched in 1956, is the country's only national operator of the stock market.

The country's secondary stock trading platform, Nextrade (NXT), will run from 8:00 a.m. to 8:00 p.m., longer than the trading hours of the main bourse operated by the KRX, which is open from 9:00 a.m. to 3:30 p.m.

The NXT will also offer lower fees than the main bourse and introduce different stock bid and ask prices.

The FSS chief said authorities will continue efforts to safeguard investors.

Yonhap