South Korea Lifts Short Selling Ban on Financial Stocks

South Korea's Financial Services Commission (FSC) has lifted the ban on short selling financial stocks, which had been in place since October 1, 2008, while requiring greater transparency for the practice.
By Jake Safane(2147484770)
South Korea’s Financial Services Commission (FSC) has lifted the ban on short selling financial stocks, which had been in place since October 1, 2008, while requiring greater transparency for the practice.

At the time of the global financial crisis, South Korea banned all short selling, but the nation then allowed the shorting of non-financial stocks on June 1, 2009. Now, investors will be able to short financial stocks too, but if anyone has a short position greater than 0.5% of a company’s total shares, the investor will have to disclose the position on the Korea Exchange (KRX) website. Short sales of less than 100 million South Korean won (roughly $100,000) will be exempted from the disclosure requirement, but all short sales of more than 1 billion South Korean won (roughly $1 million) will need to be disclosed.

The FSC says that financial stocks make up 12% of the market, so allowing short selling should boost trading activity. While the short selling ban has already been lifted, the disclosure requirements are still being worked out and the FSC expects these requirements to come into effect in the first half of 2014.

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