Korea Plans to Improve Rules on Market Makers & Tighten Monitoring of Illegal Short Sale Trades

December 22nd | 2020

Korea’s Financial Services Commission recently introduced measures to improve market maker rules and strengthen detection of illegal stock short-selling activities. The goal is to boost accountability in the market and to establish an effective monitoring system for illegal short sales. A few of the initiatives the FSC is pursuing with respect to short sales by market makers include:

• A ban on market makers’ short selling of mini-KOSPI 200 futures and options

• Discontinuing the uptick rule exemption for market makers in stock markets to address the issue of unfairness

• Developing an automated monitoring and detection system for naked short selling activities and violation of the uptick rule

• Setting up a new, special regulatory team devoted to short sale monitoring