Financial Services Commission Vice Chairman Doh Kyu-sang says the commission will actively deal with illegal short selling of listed stocks within the scope that is allowed by law.
Doh made the remark on Monday when he chaired a virtual meeting on financial risk response. He said the government will closely monitor the market, together with the Financial Supervisory Service and the Korea Exchange.
His comments come after South Korea partially lifted its ban on short selling listed stocks from Monday, ending a 14-month ban imposed to protect investors from a sudden market fall triggered by the COVID-19 pandemic.
As a result, the bans on 200 large-cap firms listed on the main KOSPI and on 150 firms listed on the secondary KOSDAQ were lifted.
Those who engage in illegal short selling will be slapped with a fine of up to 100 percent of the ordered amount earned. They could also face more than a year in prison or a fine that is up to five times the wrongfully acquired profit.
Stock short selling is a trading strategy in which investors sell stocks they borrowed on the belief that share prices will fall in the near future.