• SK FSC stated that the bill to regulate illegal short-selling was passed at the Dec. 9 plenary session of the national assembly, and now required cabinet approval.
• The bill covers the imposition of penalty charges and imprisonment of at least 1 year or a fine of more than 3x and up to 5x the avoided loss amount, for illegal short sale.
• Also requires short sellers to keep records of securities lending agreements for 5yrs.
• Plus prohibition of short sellers from taking part in equity financing of firms, with a fine of up to KRW500mn for breach; granting of power to authorities to ban short-selling.

Future Related Efforts

• SK FSC will work with KRX on developing an illegal short sale detection mechanism.
• In addition, SK FSC will carry out monthly mandatory inspection for illegal short sale, as well as increase the number of personnel responsible for monitoring.

Effectiveness

• The relevant revision to the financial investment services and capital markets act will be effective from three months after promulgation, with SK FSC working on related lower regulations to ensure smooth implementation in the meantime.