South Korea extends ban on short-selling

Friday 5 February 2021 10:07 CET | News

The South Korean Financial Services Commission has announced it will be extending a ban on short-selling after the GameStop share price pump.

Caving to pressure from retail traders, South Korea's ban on short-selling has been extended through May 2021. Financial regulators in South Korea initially placed a local ban on short sales in March 2020 along with other countries like Malaysia, Thailand, France, Spain, Italy, and Belgium. Economies around the world decided to curb short-selling as the COVID-19 pandemic began destabilising markets. While most countries quickly lifted the bans, South Korea decided in August 2020 to extend, but only until March 2021.

Following the GameStop saga, in South Korea, where retail investors dominate stock trading (accounting for 70% of the market), traders drove around in a battle bus, covered in anti-short selling slogans. Around 30,000 Korean traders reportedly came together on an online forum to drive up the prices of stocks like Celltrion that are often targeted by foreign short-sellers. Some local politicians rallied behind retail investors who were calling for an extension of the ban.   

On 3 February 2021, Eun Sung-soo, Chairman of South Korea’s Financial Services Commission held a press conference, announcing that the ban was not only extended, but will only be partially lifted after May 2. The ban will still remain on over 2,000 stocks.

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Keywords: South Korea, short-selling, GameStop, trading, retail investors, stock trading, anti-short, Celltrion
Categories: Banking & Fintech
Countries: Korea, Republic of
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