South Korea’s Financial Services Commission (FSC) has announced plans to lift the ban on short selling by the end of March 2025, aiming to allow the strategy across all equities, Bloomberg reports.
The decision comes after months of speculation about the future of the trading practice, which has been prohibited in the country since 2020.
FSC Chairman Kim Byoung-hwan said that the move is crucial for South Korea’s bid to achieve a market upgrade from MSCI Inc. The index provider has maintained the country’s status as an emerging market, and Kim emphasized that lifting the short selling ban would address one of the key barriers to a higher classification.
“With the goal of resuming short selling on all stocks at the end of March next year, we are revising laws and will ensure the systems are in place,” Kim said during his first press conference since assuming office in July.
The move is expected to enhance market efficiency and liquidity by allowing investors to profit from a decline in stock prices. The lifting of the ban could also attract more foreign investors and improve the overall attractiveness of the South Korean stock market.
In addition to the short selling ban, Kim also highlighted the importance of improving regulations related to mergers and acquisitions. His comments follow the recent withdrawal of a merger plan between Doosan Bobcat Inc. and Doosan Robotics Inc., which faced opposition from the Financial Supervisory Service and investors.
Kim stressed that South Korea aims to not only achieve an MSCI upgrade but to also elevate its capital market standards through initiatives such as the “Corporate Value-up” programs.
