BlockBeats report: On July 30, according to Yonhap News, South Korean exchanges recently assessed the technical feasibility of temporarily banning short selling and narrowing price fluctuation limits to evaluate emergency measures that could be deployed during sharp market declines. The assessment included whether the systems could execute such measures and the time required to implement them; however, sources emphasized that only technical feasibility has been confirmed, not any intention to implement them.
The Korean exchange is also evaluating further reducing the current 30% daily price limit to curb extreme single-day declines in individual stocks. The Ministry of Economy and Finance previously held an emergency market conditions review meeting and stated that, given the higher volatility of the Korean stock market compared to other countries and historical levels, it will maintain the highest level of alertness and activate a joint 24-hour monitoring system involving relevant agencies.
As the Korean stock market experienced consecutive sharp declines, temporarily banning short selling has become one of the main demands from retail investors. A related parliamentary petition has garnered approximately 10,000 supporters within two days of being made public, and some lawmakers have suggested reviving the Securities Market Stabilization Fund. Korean brokerage analysts noted that, given the time still needed for deleveraging of single-stock leveraged ETFs, a short-selling ban could help curb further declines.
However, banning short selling may conflict with Korea’s goal of being included in the MSCI Developed Markets Index. The Korea Exchange has stated that it has not received any related requests from the government, has not formally studied a ban on short selling, and that such a measure is not within the exchange’s own authority to decide.