South Korea stock market regulatory authority plans to initiate a strong crackdown on naked short-selling
On Tuesday, South Korea's stock market regulator announced the establishment of a special investigation team to scrutinize short-selling activities conducted by foreign investment banks, including potential illegal actions like naked short-selling.
According to a report from Reuters, starting from November 6, this team will investigate all short-selling transactions dating back to May 2021, when a partial lift on the short-selling ban occurred in the local stock market, as disclosed by the Financial Supervisory Service.
Presently, short-selling is permitted exclusively for 200 large-cap stocks on the KOSPI index and 150 stocks on the KOSDAQ junior index.
South Korea strictly prohibits naked short-selling of stocks, which involves selling shares without the prior borrowing or verification of their borrowability, as regulated by the Capital Markets Act.
The regulatory authority stated its intent to collaborate with authorities in Hong Kong and Singapore to conduct international investigations in the first half of 2024.
Earlier this month, the regulator identified instances of naked short-selling violations by two Hong Kong-based investment banks, which it deemed serious infractions of domestic laws and anticipated significant fines as a result.
