The Financial Services Commission noted on the 21st that it will fully resume short selling transactions as scheduled starting from the 31st. This marks the first time in 17 months for KOSPI 200 and KOSDAQ 150 index stocks, while for other stocks, it has been approximately 5 years.
According to the Financial Services Commission, 21 institutions, including major global investment banks such as Morgan Stanley, JP Morgan, Goldman Sachs, and large domestic securities firms, are in the process of establishing their own computer systems for the resumption of short selling and participating in the simulational test of the Korea Exchange's centralized inspection system (NSDS).
Sixty-two institutional investors plan to participate in short selling transactions through a pre-deposit method, which involves depositing borrowed securities into their accounts before placing short selling orders. As of this day, a total of 83 institutions are expected to participate, which corresponds to 85.6% of the past short selling transaction volume.
The Financial Services Commission decided to expand the system for designating overheating short selling stocks for a period of two months until May 31, considering that the price volatility of some individual stocks may increase due to the resumption of short selling. The overheating short selling designation system restricts short selling the next day for individual stocks with a significant spike in short selling compared to usual.
According to simulations by financial authorities, if the requirements for the proportion of short selling transaction amounts and the multiples for increases in short selling transaction amounts for KOSDAQ stocks are gradually adjusted, the number of designated overheating short selling stocks is expected to double in April and increase by about 1.3 times in May.
Financial authorities and relevant institutions will conduct a simulated operation of the centralized inspection system until the 27th, and institutions with deficiencies in their systems will be required to make improvements before participating in short selling. Additionally, the Financial Supervisory Service will conduct a final review of the securities firms' computer systems and internal control standards before the resumption of short selling.
A Financial Services Commission official stated, "We will thoroughly implement measures to prevent naked short selling during the remaining period until the resumption of short selling," and added, "After the resumption of short selling, we will closely monitor market trends and strengthen market surveillance to block unfair transactions."