S.Korea examines short selling of stocks, starting with Morgan Stanley According to Reuters

© Reuters. A currency dealer works in front of an electronic board displaying the Korea Composite Stock Price Index (KOSPI) at a bank’s transaction office in Seoul, South Korea, March 13, 2020. REUTERS / Kim Hong -Ji

SEOUL (Reuters) – South Korea’s financial regulator has conducted an inspection of the short selling of shares by major brokerages and branches of foreign companies as part of an effort to tighten supervision. for this transaction.

The Financial Supervisory Service (FSS) has begun examining short-selling transactions by the Seoul branch of Morgan Stanley & Co (NYSE: International Plc) and is expected to expand the probe to other stores, an FSS official said Tuesday.

The official said the inspection was not based on any specific suspicions or allegations of misconduct and was not aimed at any particular company. But it’s part of the company’s push to increase oversight of short selling, the sale of borrowed shares, benefiting sellers if prices fall.

“We cannot look at all companies, so the inspection will most likely focus on large companies,” the official said, adding that there is no timeframe for this work. .

Morgan Stanley’s branch is one of a number of financial services firms actively short selling stocks that South Korea recently allowed to reopen after a temporary shutdown, but under various restrictions, such as: such as tradable shares.

Data from the Korea Exchange shows that local affiliates of foreign companies such as Merrill Lynch, Credit Suisse, Goldman Sachs (NYSE:) and UBS are also among the big players in short selling.

Chairman Yoon Suk-yeol, who took office in early May, ordered a thorough scrutiny of short-selling in stocks, which many Korean retail investors complain has exacerbated the decline in shares. domestic stock market.

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