Short sellers required to make disclosures from July

[THE INVESTOR] Investors in South Korea will be required to disclose covered short sale positions on the homepage of the local bourse operator Korea Exchange from July 1.

The Financial Services Commission will impose a new regulation obligating investors to reveal their short positions and information about their identities once the amount comes to 0.5 percent of a company’s outstanding capital.

Investors will have three trade days to file their reports on the name of the short-sold stock and other personal information with regulators.

Short selling is a legitimate stock trading strategy but it has been widely blamed to be responsible for market volatility and disruption.

So far, the new regulation has drawn mixed views from experts.

Some believe it will boost market transparency providing retail investors with updated information about the volume and velocity of negative bets placed against companies. But others say the benefits of short-sales, such as increasing market liquidity and pricing efficiency, may be eroded.

Currently, the EU and Japan requires disclosures of the short-sales balance of individual stocks.

By Park Han-na (hnpark@heraldcorp.com)