• 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.

Market Makers

• 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.

Effectiveness

• Plan is to begin implementing the measures within the first half of 2021.