By Jack Kim
SEOUL (Reuters) -South Korea from Monday will re-impose a ban on short-selling shares at the least till June to advertise a “degree taking part in area” for retail and institutional traders, monetary authorities mentioned on Sunday.
The ban was lifted in Might 2021 for trades involving the shares of corporations with giant market capitalisation included within the KOSPI200 and KOSDAQ150 share value indices. The restriction has remained in place for many different shares.
Quick-selling entails promoting borrowed shares to purchase again at a cheaper price and pocket the distinction.
“The measure is geared toward essentially easing ‘the tilted taking part in area’ between institutional and retail traders,” Monetary Providers Fee (FSC) Chairman Kim Joo-hyun advised a information briefing.
“Amid continued uncertainty in monetary markets, main overseas funding banks have been engaged as a matter of follow in unfair trades … and we decided that it might be inconceivable to keep up honest buying and selling self-discipline,” Kim mentioned.
The FSC will evaluate market exercise in June to resolve whether or not there’s important enchancment to permit the ban to be lifted, he mentioned.
The regulator final week mentioned it might set up a crew of investigators to probe short-selling by overseas funding banks for criminal activity together with so-called bare short-selling.
Bare short-selling – during which an investor short-sells shares with out first borrowing them or figuring out they are often borrowed – is banned in South Korea.
The Monetary Supervisory Service in October mentioned it might seemingly positive two Hong Kong-based funding banks it decided had engaged in bare short-selling transactions price 40 billion received ($29.58 million) and 16 billion received respectively.
Earlier within the 12 months, the regulator fined 5 overseas companies together with Credit score Suisse for bare short-selling.
Officers and market watchers alike have cited uncertainty round short-selling regulation as amongst elements needing to be resolved for influential index supplier MSCI to improve South Korea to developed-market standing.
(Reporting by Jack Kim; Enhancing by Michael Perry and Christopher Cushing)
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