The logo of the Financial Supervisory Service (FSS) is seen in this undated file photo. Yonhap

Korea unveiled a plan Thursday to detect illegal stock short selling via a centralized monitoring system after it banned such trades in November last year.

Under the plan, the Korea Exchange, the country's bourse operator, will set up a monitoring system to detect illegal trades that short stocks without first borrowing them, known as naked short selling.

The centralized monitoring system will collect short-selling data and stock trading balances from 21 foreign and 78 local institutions, according to the Financial Supervisory Service, the country's financial watchdog.

The set-up of the monitoring system will take 12 months to be completed, the watchdog said, as the stock short selling ban, to be effective by June this year, may be extended again.

Early this year, President Yoon Suk Yeol said the stock short selling ban will only be lifted when an electronic system that can completely remove the side effects is firmly established.

Earlier, financial authorities had imposed a combined fine of 26.5 billion won ($19.2 million) on two foreign investment banks — BNP Paribas and HSBC — late last month over alleged naked short selling between 2021 and 2022. (Yonhap)