Startup True Short launches service tracking institutional short selling

South Korea‘s financial technology startup True Short unveiled Thursday a service that tracks information related to institutional short sellers’ activities.

The service, run on paid subscriptions on True Short online platform, aims to enable retail investors to gain access to information exclusive to institutional investors and take pre-emptive actions against a possible fall in stock price due to institutional short-selling practice.

The service offers a listed share‘s outstanding stock loan, short stock availability, borrow rate and short stock utilization rate in institutional short position, in chronological charts.

Such information can help investors avoid a loss, the company said. For example, if an investor knows that a share has low short stock availability or high borrow rate, he or she can predict a short selling is unlikely in the near future.

Short selling refers to an act of selling stocks without owning ones, on expectation that the value of the asset will decline. Korea only permits short selling to investors that borrowed the stocks, while banning a naked short selling, or a practice of short selling without borrowing stocks. 
 

Making information on institutional short positions available to the public has been an unprecedented step, Ha Jae-woo, chief executive of True Short, told the press Thursday.

Ha said information open to retail investors had been limited to one related to stock long position -- buying stocks on anticipation for a rise in value -- on conventional platforms with easy retail investor access such as web portals or home trading systems.

“On the contrary, (retail) investors have found it hard to gain access to information on short selling activities,” he said, calling True Short’s new service “an effort to create a level playing field” for retail and institutional investors.

The fintech startup‘s new service will better imply the trend on the market, compared to information provided by authorities including the Korea Exchange, as they are given in chronological order, Ha added.

By Son Ji-hyoung 
(consnow@heraldcorp.com)