Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Financial regulator considers disclosing foreign firms in case of illegal short selling
Financial Services Commission Chairman Kim Joo-hyun answers questions from lawmakers during a National Assembly audit in Seoul, Thursday. Joint Press Corps-Yonhap
By Lee Min-hyung
By Lee Min-hyung
The Financial Services Commission (FSC) is considering disclosing a list of foreign companies caught engaging in illegal short-selling of local shares amid escalating public complaints on the trading practice here, FSC Chairman Kim Joo-hyun said Thursday.
The remark came amid growing public distrust of short-selling here, as financial authorities have not made public the names of foreign investors or institutions even when they were caught doing so in the stock market here.
According to data from Rep. Yoo Eui-dong from the ruling People Power Party, a total of 127 illegal short-selling cases have so far been found since the Capital Market Law took effect in 2009. But financial regulators have not been able to disclose their corporate names due to legal hurdles.
Yoo pointed out that local securities firms have to notify investors of whether they were regulated by watchdogs due to illegal short-selling in a business report, but this is not the case for foreign investors.
“We have almost completed our internal discussion on introducing the real-name short-selling system here,” Kim told lawmakers during a National Assembly's annual audit. “We will review legal details, and when necessary, will push for the revision of laws to proactively solve the issue.”
The FSC chief, however, declined to comment on whether to ban short-selling here.
“We will keep monitoring the market, and consult with experts before taking any actions on short-selling,” he said. “It is not proper to make any official comments on the issue, even if we are aware of lingering woes from the market.”
Retail investors have for years urged the government to ban the trading practice, saying that they fall victim to institutional and foreign investors' short-selling of local stocks. But financial authorities did not accept their request, as short-selling is prevalent in stock markets in most developed countries.
Kim also pledged to take preemptive measures regarding growing concerns over ongoing financial unrest caused by the soaring won-dollar exchange rate and the rapid pace of rate hikes.
“We are taking relevant measures to stabilize the market by enhancing monitoring and purchasing corporate bonds,” he said. “We will also provide loan products worth 6 trillion won with a fixed interest rate, with a view to helping small and medium-sized enterprises ease their financial burden.”
The authority also pledged to introduce a series of policies for socially vulnerable groups and the self-employed to tackle the aggravated financial market situation amid rising prices, interest rate hikes and weakening local currency.