Ahead of the computerization of short selling set to begin in March this year, the Financial Supervisory Service initiated prior preparations. It instructed all transaction corporations intending to engage in short selling to obtain a registration number. Once the registration number is issued, it will be possible to compile information and continuously verify the existence of naked short selling, even if foreign investors place orders using various securities company accounts.
On the 6th, the FSS announced that it would implement a registration number issuance service for large-scale short selling transaction corporations. The criteria for large-scale transactions are set at a short selling balance of 0.01% or 1 billion won or more.
Short selling transaction corporations must submit account information for not only the corporation but also for each independent transaction unit to the FSS when applying for the short selling registration number. The term "independent transaction unit" refers to units that operate independently within financial institutions under the supervision of financial authorities. The FSS plans to issue registration numbers based on examinations of the investor's actual status and whether the requirements for independent transaction units are met.
Subsequently, the illegal short selling centralized blocking system (NSDS) aggregates all orders from investors who have received a short selling registration number by that number, compiling transaction information in cases where multiple securities firms or accounts are used. In this process, the existence of naked short selling is continuously detected.
The FSS plans to issue registration numbers in order to investors who have established a balance management system within their institutions.
The FSS noted, "Through the issuance of registration numbers, only substantive investors can engage in large-scale short selling transactions," adding that it would compile all trading balances and transaction histories for both corporate units and independent transaction units to establish a thorough monitoring system for illegal short selling.