The Korea Exchange (KRX) Market Surveillance Committee said on the 30th that in the year since the introduction of the Naked Short Selling Detection System (NSDS), it flagged 76 suspected short-selling-related violations involving foreign and institutional investors and notified the financial authorities.
NSDS is a system that automatically identifies suspected transactions such as naked short selling based on balance information submitted by institutional investors and trading data collected by the exchange. Previously, only monthly routine reviews were conducted, limited to settlement shortfalls or sell-first-buy-later transactions, but after the introduction of NSDS, all sell quotes can be checked on a daily basis.
According to the exchange, over the past year NSDS monitored an average of about 15 million sell quotes per day from 24 participating institutions, and by reviewing all quotes submitted by institutions, it flagged suspected cases such as naked short selling, quote display violations, and uptick rule violations.
In this process, 76 cases were confirmed as suspected short-selling-related violations and were reported to the financial authorities. Most causes of the violations were institutional system errors and human error, and the exchange said it implemented corrective measures with the relevant institutions to prevent recurrence.
The exchange said, "Through the computerized regulatory framework enabled by NSDS, we were able to detect illegal short selling early and eradicate it structurally," and added, "We will expand inspections to institutions not participating in NSDS to block illegal short selling in advance."