South Korea will likely be able to complete a system to detect illegal short selling in the first quarter of next year (1Q2025), Financial Supervisory Service governor Lee Bokhyun said on Monday. 

The watchdog’s expected timing for the platform came after the presidential office recently said short-selling restrictions will remain in place until an electronic monitoring system is developed. The comments had dampened hopes that the ban, initially stated to remain until the end of June, will be lifted soon.

“It would be good to explain to domestic and foreign investors on the future plan for the policy, such as when, under what conditions, in what way, and under what plan the country will resume stock short selling,” Lee said in an interview with MBC radio. 

Discussions on a partial lifting of the short-sale ban may be possible during the course of the platform’s development, Lee said, adding that more than 80% to 90% of illegal trades should be able to be spotted and blocked during the first stage of development. 

The system, to be managed by the Korea Exchange, will collect data on stock balances from 21 foreign institutions and 78 domestic firms, the government said last month. If there is a mismatch between a sell order and the outstanding balance, the transaction will be automatically reported to authorities. 

  - Bloomberg