By Choonsik Yoo
SEOUL (Reuters) – South Korea’s financial supervisory and prosecution agencies said on Thursday they would strengthen monitoring and punishment of illegal stock short-selling following an order by the country’s president.
The Financial Services Commission (FSC), the Supreme Prosecutor’s Office, the Financial Supervisory Service and the Korea Exchange held a meeting after President Yoon Suk-yeol sought action on Wednesday, the FSC said in a statement.
“The participating agencies agreed at the meeting to strengthen monitoring and punishment of illegal short-selling practices and to complement the regulations,” the FSC said.
In May last year South Korea lifted a 14-month ban on the short-selling of local stocks but maintained a host of restrictions, including bans on on naked short-selling and the selling of stocks outside the KOSPI200 and KOSDAQ150 indices.
Retail investors have complained that the practice mainly benefits big institutional and foreign investors and keeps stock prices artificially low, pointing to the relatively poor performance of the local stock market versus major markets.
The main exchange’s KOSPI has fallen about 19% so far this year while the junior market’s KOSDAQ has dropped 23%. This compares with a 9% fall in MSCI’s broadest index of Asia-Pacific shares outside Japan.
The FSC said the relevant agencies would continue talks on the issue.
(Reporting by Choonsik Yoo; Additional reporting by Jihoon Lee; editing by Richard Pullin)
