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Photo = FSS |
[Alpha Biz= Kim Sangjin] Ahead of the resumption of short selling at the end of March, the Financial Supervisory Service (FSS) has finalized the "Integrated Guidelines" that require large short selling firms to implement electronic systems. The guidelines, which were announced on the 19th, are part of amendments to the financial investment regulations and other related measures.
To address the potential risks of naked short selling, the FSS has decided to differentiate internal control standards for each corporation. Large short-selling firms with a short selling balance of 0.01% or more, or over 1 billion KRW, are required to establish a balance management system.
Smaller short-selling firms will need to establish rules for short selling operations and conduct legal compliance checks before placing orders, along with post-transaction verification.
Custodian securities firms must verify the internal control standards and the clarity of the division of responsibilities before accepting the initial short sale orders. They must conduct annual checks and report the results to the FSS within a month after the inspection date.
Administrative procedures to verify the authenticity of investors will also be introduced.
For large short-selling firms with a balance of 0.01% or more or performing market-making (MM) or liquidity provision (LP) transactions, a registration number will be required. Firms will need to submit details of their holdings and transaction history for all listed stocks to the exchange’s short selling central monitoring system (NSDS) to ensure information linkage.
The FSS has emphasized its commitment to strengthening communication with market participants and will hold a briefing session for custodian securities firms this month, followed by an open discussion with investors in February.
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
