Home > Business > Finance

Financial watchdog urges brokerages to watch for illegal short selling as markets dramatically fluctuate

Published: 13 Mar. 2026, 19:49

The Financial Supervisory Service's headquarters in Yeongdeungpo District, western Seoul, is seen in this file photo. [JOONGANG ILBO]

The country's financial watchdog said on Friday that securities firms should thoroughly manage and monitor illegal short selling amid increased financial volatility caused by the extended Middle East crisis.

The Financial Supervisory Service said that illegal short-selling schemes could increase as investors try to capitalize on increased market swings, which in turn hurt market confidence.

The watchdog added that it will enhance the monitoring of any irregular movements related to short selling and will get tough on market-disturbing activities.

Short selling is an investment strategy of selling borrowed securities with the intent of repaying them with stocks purchased later at a lower price. Short sellers gain profit from a drop in stock prices.

Korea temporarily banned short selling in November 2023 amid concerns of naked, or illegal, short selling, but the country reallowed it in late March of last year.

Yonhap