South Korea to reinstate stock short-selling ban until June 2024 to 'level playing field'

livemint.com:

Reuters. In May 2021, the ban was lifted for trades involving the shares of companies with large market capitalisation included in the KOSPI200 and KOSDAQ150 share price indices. Trading with borrowed shares will be banned for equities on the Kospi 200 Index and Kosdaq 150 Index from Monday until the end of June, Financial Services Commission (FSC) said on Sunday.

The restriction has remained in place for most other stocks. Short-selling is nothing but selling the borrowed shares to buy back at a lower price and pocket the difference. "The measure is aimed at fundamentally easing 'the tilted playing field' between institutional and retail investors," Financial Services Commission (FSC) Chairman Kim Joo-hyun told a news briefing as quoted by Reuters.

"Amid continued uncertainty in financial markets, major foreign investment banks have been engaged as a matter of practice in unfair trades ... and we determined that it would be impossible to maintain fair trading discipline," Kim added. He further added that, “The FSC will review market activity in June to decide whether there is significant improvement to allow the ban to be lifted." Last week, the regulator had said that it would establish a team of investigators to probe short-selling by foreign investment banks for illegal activity including so-called naked short-selling.