PASLA backs Korea Exchange CEO’s stance on short selling
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PASLA backs Korea Exchange CEO’s stance on short selling 17 March 2023 Korea Reporter: Carmella Haswell
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Organisations in the Asia-Pacific region are calling for the Korean government to curb restrictions on short selling as Korea ventures to reach MSCI developed market status.
The Pan Asia Securities Lending Association (PASLA) has backed recent comments made by Korea Exchange CEO Sohn Byung-doo on the importance of removing all remaining restrictions on short selling in the Korean market.
A temporary ban on short-selling activities was imposed by market authorities in South Korea in March 2020, which were designed to “help ease market anxieties” with the onset of the COVID-19 pandemic.
South Korea’s Financial Services Commission (FSC) has since announced steps to improve public trust in the short-selling system, including a package of measures designed to tighten oversight of illegal short selling and to improve the operation of the short-selling system, which was announced in July 2022.
PASLA continues to call on the Korean government to take action and believes removing short-selling restrictions will boost liquidity and improve price discovery.
A representative of PASLA, in response to Byung-doo’s comments, says: “Short selling is a vital risk management tool for many investors that want to take an overall long position in a market, but also need to hedge their portfolio risk.
“Permitting investors to freely engage in regulated, transparent and covered short-selling will also support the case for Korea’s inclusion in the MSCI developed market index, which will help to attract greater global investment in this dynamic economy.”
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