• SK FSC, SK GVT proposed revisions to the Enforcement decree of the capital markets act, Regulations on financial investment business, as per revised Capital markets act.
• Follows SK FSC September 2024 said short sales improvements were approved.

Revisions to Enforcement Decree

• For short selling via multilateral trading firms, notifying the stock exchange of a short selling order via the multilateral trading firms without direct notification is permitted.
• Specify the reference point for calculating the period from the announcement of the issuance plan until the determination of the conversion price or stock subscription right exercise price; apply reasons for exceptions as the same with paid-in capital increase.
• Restrict the repayment period of short selling-purpose lending transactions to 90 days, up to one year including extensions, but may be set differently in the case of suspension of trading/delisting/restriction of account transfer on the repayment date.
• Set the standard amount of fines at KRW 100mn for firms, KRW 50mn for individuals.
• Oblige short selling firms to build internal control standards and computerized systems to prevent naked short selling; specify a cycle for verifying securities houses' naked short selling prevention measures; set the standard amount of fines at KRW 100mn.

Revisions to Regulations

• Clarify that short selling shall be judged separately for funds, agency, and trust properties, market maker/liquidity provider accounts; specify details to be included in internal control standards for implementing measures against naked short selling.
• Specify the duty to submit registration number of firms required to build a computer system and self-verification by securities houses not entrusting short selling orders.

Consultation Period

• Comments by 31 December 2024 for planned effectiveness from 31 March 2025.