FSC Chairman: 'Full resumption of short selling for all stocks by end of March... Expanding overheated stock designation criteria'

Kim Byung-hwan's Monthly Press Conference

"System and regulations refined for over a year... Full resumption necessary to be meaningful"

Ahead of the resumption of short selling next month on the 31st, FSC Chairman Kim Byung-hwan clarified that "all stocks will be eligible." While some suggested starting with a 'partial resumption' to minimize market impact, the authority officially confirmed its position on implementing a 'full resumption'.

Chairman Kim responded this way when asked if 'short selling would be allowed for all stocks from the end of next month' during the 'FSC Chairman's February Monthly Press Conference' held at the Seoul Government Complex on the 24th.

Before the government banned short selling on all stocks in the market on November 6, 2023, short selling was permitted for 350 stocks included in the KOSPI 200 and KOSDAQ 150 indices in Korea. However, for this resumption, the authorities plan to expand the scope to 'all stocks'.

He stated, "When we resume this time, we intend to target all stocks," explaining that "When we previously banned everything during COVID-19 and then resumed as the COVID-19 situation improved, we implemented a partial resumption and focused on stocks with larger market caps and higher foreign investor participation due to concerns about unfair trading through short selling abuse."

He added, "Since then, the authorities have been detecting illegal trades and have spent over a year refining systems and regulations to address concerns about 'unfairness,'" and emphasized that "our goal was to establish systems capable of detecting unfair trading even with full resumption, hence our decision to implement a full resumption this time."

As a measure to minimize individual stock overheating during full resumption, he announced plans to temporarily expand the 'overheated stock designation' criteria. This means implementing a 'buffer' by broadening the criteria to include more stocks in the overheated category.

Chairman Kim said, "We will relax the overheated stock designation requirements so that more stocks will be designated as overheated stocks compared to previous criteria for a certain period," adding that "We plan to implement relaxed criteria for a month or two to prevent excessive shock to individual stocks."

Shin Min-kyung, Hankyung.com reporter radio@hankyung.com