On 21 December 2020, SK FSC issued measures on market makers, short sell.
- SK FSC introduced measures to improve market maker rules and strengthen detection of illegal stock short-selling activities, to boosting accountability in the market.
- Follows 10 December 2020 national assembly passage of bill on illegal short-selling.
- Recently, there have been concerns about the possibility of the abuse of the market maker system as trade volume has grown significantly, as well as short sale orders.
- KRX conducted inspections on market maker compliance with short sale regulations, and found a few suspicious cases of naked short selling and violation of the uptick rule.
- To address this problem, FSC will introduce restrictions on short sale trades, encourage trading of low liquidity shares, and improve the transparency of market makers.
Illegal Short Sale
- To implementation revised financial investment services and capital markets act, it is essential to set up an illegal short sale monitoring system to detect unlawful attempts.
- A two-tiered short sale monitoring system that first allows real-time monitoring of bids and other data, then market aggregates of total short orders, will be developed.
- Data on bulk orders, stock lending will be collected to monitor suspicious transactions.
- Mandatory inspection cycle of once every six months is reduced to once every month.
- FSC will develop alternative detection mechanisms to close loophole in monitoring naked short selling activities, and will also set up a new short sale monitoring team.
- Plan is to begin implementing the measures within the first half of 2021.