- South Korea will reinstate a ban on short-selling shares from Monday, with the ban set to remain in effect until at least June 2023.
- The ban was initially lifted in May 2021 but was still enforced for most stocks, only allowing short-selling for shares of select companies with large market capitalization.
- Short-selling is the practice of selling borrowed shares with the aim of buying them back at a lower price, profiting from the price difference.
- The decision to re-impose the ban is driven by the desire to create a more level playing field between retail and institutional investors and to address concerns about unfair trading practices by major foreign investment banks.
- South Korean regulators will assess market activity in June to determine whether to lift the ban, and they are also investigating foreign investment banks for activities like naked short-selling, which is illegal in South Korea.