Directional, a Fintech corporations developing a platform related to short selling, received preliminary approval from financial authorities for a brokerage business in securities lending transactions. A securities lending transaction is a transaction in which a person holding shares lends them to an investor and receives a fee in return. It is a necessary procedure when an investor who engages in short selling borrows shares.
Directional, which has been brokering securities lending transactions for institutional investors under its innovative financial service status, took the first step toward entering the formal financial industry by receiving preliminary approval.
According to the investment industry on the 24th, Directional received preliminary approval on the 31st to broker securities lending transactions for professional investors such as institutional investors from the Financial Services Commission (FSC). The final approval is typically applied for within six months from the date of preliminary approval, and the FSC decides whether to grant approval within one month.
Founded in 2018, Directional is providing securities lending transaction services for institutional investors.
To conduct short selling, a securities lending transaction is required between the buyer and the seller. Short selling is a technique in which an investor borrows shares to invest, anticipating a decline in the stock price, and then returns the borrowed shares.
However, in Korea, securities lending transactions are often carried out in a blackout manner. In existing securities lending transactions for institutional investors, transaction information had to be entered and processed separately through multiple channels, including messenger, email, order management systems (OMS), and the Korea Securities Depository system.
Directional said its OMS-linked service among the services it provides has improved the speed of transaction processing and user convenience by enabling key work procedures that had been dispersed to be handled within a single system.
Lee Yoon-jung, CEO of Directional, said, "For now, we plan to focus on obtaining final approval for the brokerage business in securities lending transactions for professional investors and on steadily expanding our institutional services," adding, "Although services for retail investors were included within the scope of innovative financial service designation in 2025, we are not operating them at present."
Lee added, "After sufficiently expanding our institutional services and securing related infrastructure and partnerships with securities firms, we plan to expand the approval scope to general investors."