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South Korea's Financial Supervisory Service (FSS) announced that it would impose fines on four major financial institutions—JPMorgan, Morgan Stanley (NYSE:MS), Nomura, and UBS—for violating short-selling rules in the country's stock market.
The decision, made by the Securities and Futures Commission, was confirmed by FSS officials, although specific details regarding the fines were not disclosed due to the information not being officially released yet.
The implicated firms offered varied responses to the announcement. Nomura stated it was not aware of any decision by the regulator and thus could not comment. JPMorgan and Morgan Stanley declined to comment on the matter. UBS also indicated that it did not have any comment at this time.
In South Korea, the practice of naked short-selling, which involves selling stocks without first borrowing them or ensuring that they can be borrowed, is prohibited under the Capital Markets Act.
The country is preparing to end a broader ban on stock short-selling that was introduced in November 2023. This upcoming March, South Korea plans to lift the ban with the expectation that a system will be in place to detect illegal trades effectively.
The fines come at a time when South Korea is closely monitoring its markets and preparing for the reauthorization of short-selling activities. The nation's regulators are focused on maintaining market integrity and enforcing compliance with trading regulations.
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