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PASLA backs Korea Exchange CEO’s stance on short selling


17 March 2023 Korea
Reporter: Carmella Haswell

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Image: panyaphotograph/stock.adobe.com
Organisations in the Asia-Pacific region are calling for the Korean government to curb restrictions on short selling as Korea ventures to reach MSCI developed market status.

The Pan Asia Թ Lending Association (PASLA) has backed recent comments made by Korea Exchange CEO Sohn Byung-doo on the importance of removing all remaining restrictions on short selling in the Korean market.

A temporary ban on short-selling activities was imposed by market authorities in South Korea in March 2020, which were designed to “help ease market anxieties” with the onset of the COVID-19 pandemic.

South Korea’s Financial Services Commission (FSC) has since announced steps to improve public trust in the short-selling system, including a package of measures designed to tighten oversight of illegal short selling and to improve the operation of the short-selling system, which was announced in July 2022.

PASLA continues to call on the Korean government to take action and believes removing short-selling restrictions will boost liquidity and improve price discovery.

A representative of PASLA, in response to Byung-doo’s comments, says: “Short selling is a vital risk management tool for many investors that want to take an overall long position in a market, but also need to hedge their portfolio risk.

“Permitting investors to freely engage in regulated, transparent and covered short-selling will also support the case for Korea’s inclusion in the MSCI developed market index, which will help to attract greater global investment in this dynamic economy.”
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