S. Korea extends stock short-selling ban until March ’25

South Korea’s financial regulator, the Financial Services Commission (FSC), announced on Thursday a nine-month extension on the ban on stock short-selling, delaying its expiration from June 2024 to March 2025.

The FSC cited concerns about illegal short-selling as the reason for the extension. In a statement, the commission expressed fears that lifting the ban without a proper monitoring system could lead to a repeat of large-scale illegal activity.

Authorities uncovered a significant amount of illegal short-selling before the ban’s implementation. The FSC identified naked short-selling orders valued at 211.2 billion won (153.8 billion).

Short-selling is a trading strategy where investors borrow shares of a company, sell them in the market, and then repurchase them later to return to the lender. This strategy profits if the stock price falls between the selling and repurchasing stages.

The authorities are working on building the Naked Short-Selling Detecting System by March 2025. This system will be operated by the Korea Exchange to monitor short-selling activity by institutional investors.

Attribution: Xinhua