SEOUL, Jan. 26 (Yonhap) — South Korea’s bourse operator said Tuesday it is willing to raise financial consumers’ trust by strengthening monitoring of suspicious trading transactions and improving short selling regulations.
The increase in the number of investors has raised people’s standard for the local market, requiring a higher level of protection and fairness, Korea Exchange (KRX) Chairman Sohn Byung-doo said in an online press conference held in Seoul.
“We are open to hearing different voices to reasonably overhaul the unreasonable market system,” Sohn said.
“We also plan to toughen the pre-monitoring and post-management of the short selling system that have drawn much attention from the market, so that it can be operated legally,” he added.
Stock short selling is a trading technique in which investors sell stocks they borrowed on the belief that share prices will fall in the near future. The more stock prices fall, the more profit they get.
The investing tool has been a source of complaint from individual investors with limited leverage, while it is favored by offshore and institutional investors as a convenient investment tool.
Sohn said the KRX will require more information related to short selling and forbid the uptick rule for the asking price of short-sold stocks.
In September, the Financial Services Commission extended the temporary ban on stock short selling for another six months until March 15 this year, in a move to ease market jitters over the COVID-19 pandemic.