The Financial Supervisory Service (FSS) has begun investigating short-selling transactions at the Soul branch of Morgan Stanley & Co International Plc and is expected to expand the investigation of other outlets, an FSS official said on Tuesday.
The official said the inspection was not based on a specific suspicion or allegation of wrongdoing and was not aimed at any particular company. But it was part of its efforts to strengthen oversight of short-selling, which involves selling borrowed stock, which benefits the seller if prices fall.
“It is not possible for us to examine all the companies, so the inspection will most likely focus on the big players,” the official said, adding that no timetable had been set for this work.
The Morgan Stanley branch is one of the financial services firms most active in stock shorting, which South Korea recently allowed to resume after a suspension but under many restrictions, such as tradable shares.
Korea Exchange data shows that local branches of foreign companies such as Merrill Lynch, Credit Suisse, Goldman Sachs and UBS are also among the top performers in terms of stock shorting.
Chairman Yoon Suk-yeol, who took office in early May, has ordered extensive oversight of the stock shorting, which many South Korean retail investors have complained has worsened the fall. of the local stock market.