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Korea to mandate short selling reporting
02 July 2012
Korean regulators are to introduce reporting rules for short sellers at the end of August
short selling reporting
Short sellers in the Korean market are to face reporting requirements as of August 30 to give regulators more access to data on short selling activities.
The rules will be introduced by the Financial Services Commission (FSC), the Financial Supervisory Services (FSS) and the Korea Exchange.
In a statement, the FSC and FSS said that while short selling provides liquidity and price discovery, there are concerns it would “distort market order and be abused for unfair trading in times of unstable stock markets”.
The proposal follows a three-month short selling ban that was implemented in August 2011.
The new reporting rule will apply to investors who have an open short position of 0.01% or above of the issued share capital of a company listed on the Korea Exchange. Investors who fall within this category will have to report to the regulators at the end of each trading day.
Investors will be expected to report the name of the shorted stock, the name and other personal information of the reporting individual, total quantity of open short positions of the shorted stock and the proportion of short positions to the issued share capital. The regulators said the rule would help them to cope with unfair trading in a timely manner.
The proposed rule will go to the FSC for approval in August and will be part of the proposed changes to Regulation on Financial Investment Services.