Seoul to allow individual investors to borrow stocks for 90 days for short sale

2021.09.23 15:17:36 | 2021.09.23 15:29:44

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Individuals can borrow Korean stocks for short sale for 90 days, increased from 60 days, starting November, and can extend the loan upon expiry in new incentives to bring retailers closer to the complex investment activity.

The Financial Services Commission (FSC) announced Thursday that individual investors will have up to 90 days to borrow stocks for short sale starting November 1.

They will also be allowed to extend payback deadline for multiple times, the FSC said.

The rule revision is aimed at providing better access to short sale transactions to retail investors, according to the financial authority, as there has been an increasing number of amateur investors who use short position as their investment strategy to take advantage of stock price volatility.

The number of brokerage houses which offer stock lending service to individual investors will increase from the current 19 to 28 within the year.

The authority will also set up a real-time borrowed stock transactions monitoring system by the end of the year to enhance trading efficiency.

Since brokerages accommodating retailers to lend stocks increased to 19 from six from May 3, daily shorting by individual investors surged 41 percent to 11 billion won from the previous year. Retail share in short sale turnover edged to 1.9 percent from 1.2 percent in 2020.

Biggest shorted Korean stock during the period was Kakao that drew 2.1 trillion won in short account.

By Choi Mira

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