South Korea bans short selling for six months
17 March 2020 Asia
Image: Shutterstock
South Korea’s financial regulator has banned short selling in the KOPSI, KOSDAQ and KONEX for six months in a bid to curb the freefall in equities markets caused by the coronavirus, which continues to spread itself across the globe.
South Korea is suffering from the region's biggest COVID-19 outbreak outside of China, with more than 8,300 confirmed cases and 81 deaths at time of writing, according to Johns Hopkins University’ virus tracker.
The country’s market regulator, the Financial Services Commission (FSC), enacted the ban from 16 March to September 15, after another day of record-breaking losses were recorded in the country’s markets.
Seoul’s benchmark index (KOSPI) plunged 13.2 percent last week, its biggest drop since the financial crisis in 2008, when the FSC also imposed a lengthy short selling ban. As a result, the country is taking unprecedented measures to help protect Asia’s fourth-largest economy against the coronavirus.
During the six-month period, the current limits on stock buybacks will also be lifted for select companies. The Korea Exchange may also ease the rules upon approval from the FSC.
The decision to ban short-selling is seen as the “strongest step” the FSC has taken since the financial crisis in order to address equity market volatilities.
Several other market regulators in France, Italy, Turkey and elsewhere have recently imposed similar bans on for certain stocks, but these have been limited to single trading sessions following significant sell-offs.
After South Korea, the next longest ban has been imposed by Spain, which today signed off on a one-month halt on all short selling. Spain is also among the list of countries most affected by the virus.
The FSC have been contacted for further comment, but have yet to respond.
More details to follow.
South Korea is suffering from the region's biggest COVID-19 outbreak outside of China, with more than 8,300 confirmed cases and 81 deaths at time of writing, according to Johns Hopkins University’ virus tracker.
The country’s market regulator, the Financial Services Commission (FSC), enacted the ban from 16 March to September 15, after another day of record-breaking losses were recorded in the country’s markets.
Seoul’s benchmark index (KOSPI) plunged 13.2 percent last week, its biggest drop since the financial crisis in 2008, when the FSC also imposed a lengthy short selling ban. As a result, the country is taking unprecedented measures to help protect Asia’s fourth-largest economy against the coronavirus.
During the six-month period, the current limits on stock buybacks will also be lifted for select companies. The Korea Exchange may also ease the rules upon approval from the FSC.
The decision to ban short-selling is seen as the “strongest step” the FSC has taken since the financial crisis in order to address equity market volatilities.
Several other market regulators in France, Italy, Turkey and elsewhere have recently imposed similar bans on for certain stocks, but these have been limited to single trading sessions following significant sell-offs.
After South Korea, the next longest ban has been imposed by Spain, which today signed off on a one-month halt on all short selling. Spain is also among the list of countries most affected by the virus.
The FSC have been contacted for further comment, but have yet to respond.
More details to follow.
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