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KRX highlights need for full resumption of short-selling

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Korea Exchange (KRX) Chairman and CEO Sohn Byung-doo speaks during a press conference held at the Seoul office building of the KRX in Yeouido, Tuesday. Courtesy of KRX
Korea Exchange (KRX) Chairman and CEO Sohn Byung-doo speaks during a press conference held at the Seoul office building of the KRX in Yeouido, Tuesday. Courtesy of KRX

By Anna J. Park

Korea Exchange (KRX) Chairman and CEO Sohn Byung-doo stressed the need to fully allow short-selling for all listed stock items, if the local stock markets aim to be included in MSCI's Developed Markets Index.

"If the Korean stock market wishes to step forward as an advanced capital market, it is necessary for the local stock markets to allow short-selling full-scale," the KRX chief said during a press conference held on Tuesday.

The country's financial authority banned short-selling for all listed stocks in March 2020 amid the KOSPI's crash due to the shock of the pandemic outbreak. Short-selling has since resumed partially last May on large- and mid-cap sized companies included in the KOSPI 200 and Kosdaq 150 indices.

Yet, Sohn added that close consultation with the country's financial authorities is a prerequisite for the resumption of short-selling, saying that the full resumption of short-selling cannot be decided by the KRX alone.

"Discussions on how and when short-selling should be fully allowed can only proceed further when there exists a consensus on the matter," the KRX chief added.

He also highlighted the need to strengthen regulations on selling stock options. Since Kakao Pay's executives jointly exercised a massive amount of stock options less than a month after the firm's IPO, there have been calls to regulate stock options for the sake of protecting retail investors. But he said that any restraints on the exercise of stock options should be done in a market-friendly way, by disclosing inside information transparently, rather than by simply banning such moves.

Sohn also said the key goal of the bourse operator for this year is for the KOSPI index to recover the 3,000-point mark ― which now has fallen to some 2,700 points ― by earning the market's trust and by leveling up the local stock market systems.


Park Ji-won annajpark@koreatimes.co.kr


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