Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
Korea to impose up to 5-year ban on illegal short selling
Financial Services Commission (FSC) Chairman Kim Byoung-hwan, left, speaks during an FSC meeting of its ranking officials at Government Complex Seoul, April 4. Yonhap
By Lee Yeon-woo
Korea will impose stricter sanctions, including a trading ban of up to five years, on individuals found to have engaged in illegal short selling and other unfair trading practices, the Financial Services Commission (FSC) said Monday.
Under the revised enforcement decree of the Capital Markets Act, approved at a cabinet meeting on Monday, the new rules will take effect on April 23.
The key measure restricts individuals involved in unfair trading or illegal short selling from trading financial investment products for up to five years. The length of the ban will be determined based on factors such as the market impact, the volume of short sale orders and the scale of illicit profits.
Accounts suspected of being used for unfair practices may also face immediate payment suspensions for up to one year. Financial institutions that fail to comply with an FSC suspension request could be fined up to 100 million won ($70,209).
The revised decree also bars individuals found guilty of such practices from serving as executives at listed firms or financial institutions. Restrictions could last up to five years, but the duration may be reduced if the risk of repeat violations is deemed low.
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"Due to the high rate of repeated offenses in unfair trading and the significant damage it causes to public trust, strong enforcement measures are necessary," an FSC official said. "We expect that the introduction of these non-monetary sanctions, which have been adopted by other major economies, will help protect investors and foster a fair, orderly market environment."