Huo Xing Finance reports that on July 30, according to Yonhap News, the Korea Exchange 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 system could implement such measures and the time required to complete adjustments; however, insiders emphasized that only technical feasibility has been confirmed, not any intention to implement them. The Korea Exchange also evaluated further reducing the current 30% daily price fluctuation limit to constrain single-stock declines during extreme market conditions. Previously, the Ministry of Economy and Finance held an emergency market conditions review meeting and stated that, given Korea’s stock market volatility exceeds both international and historical levels, it will maintain the highest level of alertness and activate a joint 24-hour monitoring mechanism across relevant agencies. As Korea’s stock market has continued its sharp decline, temporarily banning short selling has become one of the primary demands from retail investors. A related parliamentary petition has garnered approximately 10,000 signatures within two days, and some lawmakers have suggested reviving the Securities Market Stabilization Fund. Korean brokerage analysts noted that, given the time still needed for leveraged ETFs on individual stocks to de-leverage, a short-selling ban could help curb further declines. However, a short-selling ban may conflict with Korea’s goal of inclusion in the MSCI Developed Markets Index. The Korea Exchange officially stated that it has not received any government request regarding such a ban, has not formally studied the possibility, and that such a measure cannot be unilaterally decided by the exchange.
South Korean regulators are evaluating the feasibility of banning short-selling amid the market crash.
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Summary
South Korean regulators are evaluating a potential short-selling ban to reduce market volatility following recent stock market declines. The Korea Exchange says it is technically feasible, but no action has been taken yet. Over 10,000 people have signed a petition supporting the move. Altcoins to watch may experience ripple effects if trading rules change. The Ministry of Economy and Finance has also established a 24-hour monitoring system. Analysts warn that such a ban could delay South Korea’s inclusion in the MSCI developed markets index.
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