Watchdog urges brokerages to enhance monitoring of illegal short selling
The headquarters of Financial Supervisory Service located in Yeouido, Seoul / Yonhap
The country's financial watchdog said Friday that securities firms should thoroughly manage and monitor illegal short selling amid increased financial volatility caused by the extended Middle East crisis.
The Financial Supervisory Service said illegal short selling schemes could increase by capitalizing on increased market swings, which in turn hurts market confidence.
The watchdog said it will enhance the monitoring of any irregular movements related to short selling and will get tough on market-disturbing activities.
Short selling is an investment strategy of selling borrowed securities with the intent of repaying them with stocks purchased later at a lower price. Short sellers gain profit from a drop in stock prices.
Korea temporarily banned short selling in November 2023 amid concerns of naked, or illegal, short selling but reallowed it in late March last year.