South Korea cracks down on illegal short selling amid record 289.3 trillion won surge
South Korea's financial watchdog has uncovered a surge in short-selling activity over the past year, with transactions totalling 289.3 trillion won. The Korea Exchange (KRX) also flagged 76 suspected cases of illegal short selling since introducing its real-time monitoring system. Many of these cases involved major financial firms and high-profile stocks like Samsung Electronics.
The KRX's new monitoring system, known as NSDS, tracks around 15 million short-selling transactions each day. Of the 289.3 trillion won in short sales, 91.3%—equivalent to 264.2 trillion won—were conducted by 24 financial institutions participating in the system.
The daily average value of short-selling deals climbed from roughly 170 billion won in February to about 240 billion won in March. This period coincided with extreme volatility in the Kospi index, which at one point plummeted over 12% in a single day. Among the 76 suspected illegal cases, 68.4% involved sums under 100 million won ($65,823). Investigations pointed to major brokerages, including Korea Investment & Securities, Mirae Asset Securities, and NH Investment & Securities. The affected stocks included blue-chip companies such as Samsung Electronics, SK Hynix, and Hyundai Motor.
The findings highlight the scale of short-selling activity in South Korea's stock market. With the KRX's monitoring system now in place, regulators are scrutinising transactions more closely. The results could lead to stricter enforcement against illegal practices in the coming months.
