Customer Notices Korea – short selling notice

Korea – short selling notice

Effective October 1st, 2008, the Financial Supervisory Commission ("FSC") has announced a temporary ban on short sales which includes all KRX and KOSDAQ listed stocks.

However, the following exemptions and exception cases are available:

  1. Quotation for block trading during regular hours, basket trading during regular hour, after-hours block trading, after-hours basket trading
  2. Quotation for after-hour trading other than above 1.
  3. Quotation for ELW trading
  4. LP Quotation for ELW, ETF and stock
  5. Hedge Quotation of ELWLP
  6. Hedge Quotation of ETFLP
  7. Hedge quotation by market maker of the futures or options
  8. Other trading quotation which deemed necessary by KRX
  • As an exception based on Item 8, the KRX has stipulated one case under the rules referring to OTC trades:
    "Selling the borrowed stocks in order to hedge or reduce loss of the OTC derivatives products and such OTC derivatives products are managed by financial institution which got license/authorization from domestic or offshore financial supervisory authority and the related OTC derivatives products' P&L are determined by the movement of stock price or stock index price".

In the case of exception 8, please note that KRX 's stance has been very conservative and you should contact Credit Suisse first.

When submitting quotations with respect to any items falling under 5-8 above , it is required that the relevant evidence/ supporting documents together with the reporting form stipulated in the regulation are submitted to the KRX up until the last trading date of the following week from the date of quotation.