Reason for proposal

Short sale is a credit sale in which borrowed stocks are sold and then refunded using purchased stocks, and is a widely accepted transaction technique in all advanced stock markets. However, naked short sale for sale without borrowing stocks is strictly prohibited by law due to the risk of non-performance of payment and the possibility of abuses in speculation, etc. Short sale has been prohibited until March 30, 2025 because, unlike foreign stock markets, the Korean stock market has greater variability and a larger share of private investors; because short sale has the possibility of interfering with proper price formation in stock markets; and because continuous naked short sale of global IB has recently been detected. Therefore, the proposed revision aims to solve the illegal and unfair issues associated with short sale and to protect investors by improving the basic short sale system through the establishment of computer systems, limiting the refund period for loan transactions for short sale, and strengthening the criminal punishments and sanctions for illegal short sale.