South Korea will re-impose a ban on short-selling shares from Monday at least until June next year to allow regulators to actively improve rules and systems of the stock exchange.
A short sell, which is one of the popular trading methods by borrowing shares for trade, will be banned for companies in the Kospi 200 Index and Kosdaq 150 Index. The regulator said that amid market turmoil, they have found massive illegal naked short-selling by global investment banks and circumstances of additional illegal activities.
Kim Joo-hyun, Financial Services Commission Chairman, said that this is a grave situation where illegal short-selling undermines fair price formation and hurts market confidence.
South Korea will seek to improve a “level playing field” for retail and institutional investors in the coming months, which also includes ways to narrow the different requirements for short-selling and conditions between institutions and individual investors.
In addition, illegal short-selling activities will face stronger punishment as regulators will monitor short-selling transactions of global banks.
The Korea Composite Stock Price Index (KOSPI) jumped 92.31 points or 3.90% to 2,460.65 points as the market approached the afternoon session.
