KRX to launch portal on short-selling

The Korea Exchange will launch a new web portal in June to provide information on short-selling in the local stock market and facilitate individual investors’ access, the market operator said Thursday.

The beta version of the website will kick off Monday, through which the KRX is expected to gather feedback from investors until June 16, 10 days ahead of the official launch of the service available in Korean and English.

The KRX said in a release Thursday that it aims to address misconceptions surrounding the short-selling activities, which it said is derived from “limited access” to information.

“Investors’ attention to short-selling is high, but they have suffered limited access to short-selling-related information,” the KRX said in the release. “Misunderstandings on short-selling have been spreading among individuals, and we found the need to narrow the information gap.”

Many individual investors in South Korea have taken to web portals such as Naver or Daum to gain knowledge on stock markets. But neither of the platforms offer an adequate amount of information on short-selling, the KRX explained.

Using the new website, however, investors would gain easier access to information, including the 50 listed firms with the highest account balance from short-selling activities and stocks that investors excessively short sell, as well as related laws and regulations and answers for frequently asked questions. Some of the content will also be translated into English.

The new web portal has no connections with the two major portal operators, said Han Sam-man from the KRX on Friday.

He added that the move is unlikely to lead to more short-selling practices by individuals.

“The launch will help individual investors take advantage of the information from the website and make better investment decisions, rather than encourage them to short sell stocks,” Han told The Korea Herald.

In South Korea, covered short selling -- either by equity firms financed by a lender exclusively for them or by individuals who borrowed stocks from securities firms -- is deemed legal, while naked short-selling is against the law.

But individuals face barriers, due to high bars set by the securities firms in terms of lending stocks, which often trigger a sense of isolation among individuals that institutional investors are usually beneficiaries of short-selling stocks.

Alongside the launch, the operator also said that the revised regulation mandating an investor to disclose an account balance within two days -- instead of the current three -- after investors have short sold stocks will begin to take effect from Monday.

Financial firms in South Korea are required to submit a regulatory filing on short-selling balance under a revision of the capital market law, which took effect last June.

The website will be accessible at http://short.krx.co.kr. 

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