South Korea's financial regulator will tighten up monitoring of stock short selling in a bid to help subdue steep stock price falls, the Financial Supervisory Service (FSS) said Wednesday.
"The FSS decided to strengthen the monitoring of short selling to minimize stock market commotion triggered by the European debt crisis and the Cheonan incident," a high-ranking FSS official said.
To that end, the regulator will track trading of global investment banks and securities firms, two major users of short selling.
Short selling enables investors to sell stocks they borrow in anticipation of a price decline. They profit when they buy stocks at a lower price than when they return the borrowed shares.
The regulator will take preventive measures if the necessity arises, it said.
The South Korean key index KOSPI closed 1.36 percent higher Wednesday after falling to the lowest level in nearly four months in the previous session.
Escalating tensions with North Korea over the deadly March sinking of the navy vessel and deepening concerns over the European debt crisis hammered the local stock market, prompting foreign investors to flee the local equity market.
The FSS will also step up foreign currency liquidity conditions at local banks while tracking the expiration of debts extended from financial companies in the debt-ridden European region, the regulator said.//Yonhap
"The FSS decided to strengthen the monitoring of short selling to minimize stock market commotion triggered by the European debt crisis and the Cheonan incident," a high-ranking FSS official said.
To that end, the regulator will track trading of global investment banks and securities firms, two major users of short selling.
Short selling enables investors to sell stocks they borrow in anticipation of a price decline. They profit when they buy stocks at a lower price than when they return the borrowed shares.
The regulator will take preventive measures if the necessity arises, it said.
The South Korean key index KOSPI closed 1.36 percent higher Wednesday after falling to the lowest level in nearly four months in the previous session.
Escalating tensions with North Korea over the deadly March sinking of the navy vessel and deepening concerns over the European debt crisis hammered the local stock market, prompting foreign investors to flee the local equity market.
The FSS will also step up foreign currency liquidity conditions at local banks while tracking the expiration of debts extended from financial companies in the debt-ridden European region, the regulator said.//Yonhap
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