South Korea ends the longest imposition of a short sales ban in history after systematic reforms

On Monday, South Korea raised the tallest short -selling ban in the country’s history, after tightening measures to the illegal transaction campaign.

Pre -prohibition was placed in place November 2023 After a series of short violations that included many global investment banks.

Starting on Monday, the open sale will be on 2,700 shares on the Korea Stock Exchange, according to the country’s financial services committee. Previously, only 350 shares are allowed on standard KosPI and small kosdaq.

Unlike the previous ban on the country’s short group, the last ban was largely driven by organizational reasons and went to protect retail investors, industry experts said.

A previous ban for sale in Korea occurred from:

• October 2008 – May 2009 during the global financial crisis
• August 2011 – November 2011 during the debt crisis in the euro area
• March 2020 – May 2021 through the street epidemic

In addition, although previous bannings aimed at stabilizing the financial markets, the 2023 measurement is aimed at regular reforms to improve access to the retail investor, analysts from Macquarie said.

The sanctions on the open sales have been strengthened significantly, with the entry of the Korea exchange Discover the open sale. An open naked sale includes shortening shares without borrowing and is illegal in South Korea.

Frains of illegal profits have also been raised, and implementation measures have been tightened. A profit of 5 billion Korean ($ 3.4 million) or more can lead to a five -year prison sentence to life imprisonment.

Foreign investors were arrested at the intersection of the pre -embargo, and some global investment banks were punished. As much as February, financial supervision services in the country Fines imposed on many large investment banks Like Jpmorgan and Morgan Stanley to violate the rules of short sales.

It is expected that the ban on the South Korea market will enhance.

Kim, who added that the additional liquidity of the market will encourage the greatest participation of more hedge funds and promoting the transparency of the market, that a return to the open sale must bring positive effects to the total market and investors.

“The value is scheduled to outperform growth. This is another reason for our belief that the resumption of short sale is likely to be neutral to a positive for the wide market,” said Macquarie analysts.

Goldman Sachs also expects a higher commercial activity than foreign investors as soon as the exposed sale resumes, with about 70 % of the total short activities carried out by foreign investors.

The Investment Bank said: “Once the short activities are resumed, the market efficiency and the discovery of prices must be improved, which provides potential alpha opportunities,” the investment bank said.