Stock news 10:27 am 2024-01-15
South Korea’s Financial Services Commission (FSC) has found two major global investment banks guilty of naked short selling on the South Korean stock market. The amount is as high as USD 41 billion. The FSC will take action to punish the two investment banks However, the names of the investment banks have not been disclosed at this time.
FSC says Naked Short Selling is against South Korea’s capital market law. This damages the stock market and undermines investor credibility, and the FSC will act by fining the two investment banks.
The Chairman of the FSC, Kim Ju-hyun, said, “The aim of announcing the ban on short selling is to improve the regulations and the trading system in the stock market. Create parity between retail investors and institutional investors. In the past we saw that foreign investment banks were doing Naked Short Selling, which is an illegal practice. and affects confidence in the South Korean stock market.”
At the end of December last year, the FSC hit HSBC Holdings and BNP Paribas with fines of at least 10 billion won (US$7.7 million). ) in the crime of Bare Short Selling
Bare Short Selling means selling short stocks that have not been borrowed before, or in other words, Short selling Stocks without the investor actually holding the shares. This is prohibited according to South Korean capital market law.
The South Korean government launched an investigation into short selling of stocks by major brokerage firms and branches of foreign companies in August. 2022 as part of efforts to tighten the oversight of short selling. By then South Korean President Yoon Seok-yeol has ordered a comprehensive investigation into stock short selling. After many South Korean retail investors complained that Short selling stocks is one of the reasons why the South Korean stock market fell suddenly.
By InfoQuest News Agency (15 Jan. ’24)
Tags: South Korean stock market, investment banking, South Korea
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