The nation’s foremost monetary regulator on Monday stated it should launch a brand new inventory lending system for retail buyers to achieve higher entry to short-selling inventory borrowing.
Quick promoting is a buying and selling method wherein buyers promote borrowed shares with the idea that the inventory worth will go down within the close to future. Quick sellers revenue in the event that they purchase again the shares at a lower cost than they offered them for.
Beneath the brand new system, a complete of 17 native brokerage homes, together with Korea Funding & Securities, NH Funding & Securities, Samsung Securities and KB Securities, will begin lending Kospi 200 and Kosdaq 150 shares as much as 2.4 trillion gained ($ 2.1 billion) as of Might. 3, the Monetary Companies Fee stated in an announcement.
Eleven different securities corporations, together with KTB Funding & Securities, Hanwha Funding & Securities and IBK Securities, will function securities lending providers by the top of this 12 months.
The most recent transfer got here after the FSC determined to permit the resumption of quick promoting from Might 3, which will likely be restricted to shares within the Kospi 200 and Kosdaq 150 indices, aimed toward growing retail investor participation available in the market. quick promoting market, largely dominated by institutional buyers. and international buyers, who’ve higher entry to the capital and knowledge they should revenue from quick promoting.
Retail buyers have lengthy criticized the dearth of shares out there for brief promoting available in the market. In February of final 12 months, solely 6 native brokerage homes – NH Funding & Securities, Kiwoom Securities, Shinhan Funding Company, Daishin Securities, SK Securities and Yuanta Securities Korea – operated inventory loans for people, which s ‘amounted to some 20 billion. gained in whole, in keeping with the info.
In the meantime, the FSC would require day merchants to take on-line coaching programs and simulate funding trials, supplied by the Korea Institute of Monetary Funding, earlier than borrowing shares for brief promoting. .
As well as, there will likely be quick promoting limits, relying on their funding experiences, to keep away from extreme losses.
Newbies could make quick gross sales of as much as 30 million gained, whereas mid-level buyers, who’ve used the buying and selling tactic greater than 5 occasions with a complete quantity of inventory borrowing amounting to 50 million gained or extra, are topic to a cap of 70 million. Gained. Skilled buyers with greater than two years of expertise briefly promoting needs to be excluded from the envisaged funding restrict.
By Choi Jae-hee ([email protected])