South Korea Extends Short-Selling Ban Amid Crackdown on Illicit Trading

South Korea has extended its ban on short-selling stocks as it works to develop an electronic monitoring system to curb illicit trading practices. The ban, initially set to expire on June 30, will likely remain in place until the end of March next year, as authorities aim to strengthen regulations and fines.

South Korea said on Friday the ban on short-selling of stocks will be extended for now as the government focuses on developing a system to control illicit trading practices before resuming the trading strategy.

The Financial Services Commission said it will focus on establishing an electronic monitoring platform to better detect naked-short sales until March next year, and also strengthen fines involved with illicit trading practices. Local Yonhap News reported the ban is likely to stay until the end of March next year, without citing anyone.

The ban had been set to expire on June 30. Short-selling, a practice involving borrowing shares and then selling them in the market, has been an unpopular trading strategy among South Korean retail investors and has been banned since November last year as authorities vowed to root out illegal trading practices including naked short-selling.

Global investors are closely monitoring South Korea's short-selling rules as critics blame the inability to place bearish bets as a hedging strategy for reduced transparency in the market. Global index provider Morgan Stanley Capital International (MSCI) on June 7 said South Korea's short-sell ban policy worked to deteriorate market accessibility as it downgraded accessibility for Korea to "-" or "improvements needed", from "+" or "no issues or improvements possible."

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)