S Korea – FSC Illegal Short Selling Measures

S Korea – FSC Illegal Short Selling Measures

On 28 July 2022, SK FSC issued new detection and punishment measures.

  • SK FSC announced measures to strengthen detection and punishment of illegal short selling, and enhancing a short selling related system jointly with related organizations.
  • Follows SK FSC December 2020 updated on passage of illegal short-selling bill.


  • SK FSC Chairman Kim Joo-hyun presided over a meeting with relevant institutions and announced measures to improve short selling system and to strengthen oversight.
  • Also to improve the punishment that is levied on all such illegal short selling activities.
  • Participants shared investors’ concerns about use of short selling in illegal transactions and the ineffective oversight and punishment on the current illegal short sale activity.
  • This need to be resolved in order to restore investors’ trust in domestic stock markets.
  • Authorities agreed to strengthen oversight, detection and punishment of illegal short selling activities and improve the system, to stamp out illegal short selling activities.

Proposed Plan

  • The plan will consist of four main aspects with which the authorities will seek stronger oversight and detection, while also imposing stricter punishment at the same time.
  • It will strengthen both the oversight and punishment on illegal short selling activities, and it will also be deigned to strengthen monitoring over stock lending transactions.
  • Further measures will then expand the application of overheated short selling stock designation, and provide all retail investors with fair opportunities for short selling.
  • To help improve public trust on short selling system, authorities will quickly implement the specific measures that have been outlined within the agreed new plan framework.
  • In particular, the measures to strengthen oversight and punishment on illegal short selling will be implemented as soon as possible, to ensure the public are reassured.
  • However, some measures will require various revisions to be made to the existing regulations, and these will be carried out with a goal to begin implementation in 2022.