Korea Exchange bans short selling for three months
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Korea Exchange bans short selling for three months 10 August 2011Seoul Reporter: Anna Reitman
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The Korean Financial Services Commission (FSC) has announced a temporary ban on short selling for three months amid stock market declines and growing concerns over a double-dip US recession and deepening eurozone fiscal crisis.
"Short sales are significantly increasing in the falling markets, spreading market anxiety," the FSC said, adding that it will temporarily ease restrictions on the amount of shares that issuers can repurchase their own stocks per day.
The amount of short sales, which was KRW100 billion per day (€64.6m) on average in the first half of this year, has recently surged over KRW 400 billion (€258.2m), according to the FSC, exceeding the previous record high of KRW 234.6 billion (€151m) in September 2008.
In response, the FSC banned short selling of all listed stocks, starting 1 October 2008, and lifted the ban on non-financial stocks on 1 June 2009, while leaving the ban on financial stocks intact.
Since last week, panic selling on Korea Exchange (KRX) prompted the bourse's officials yesterday to announce increased market monitoring. The Kospi Index dropped to a low of 1,685 yesterday - its lowest since July 2010, to close above 1,800 and was last at 1,806, its lowest since September 2010.
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