SEOUL: The financial regulatory body of South Korea announced plans to increase the protection ceiling on bank deposits from 50 million won to 100 million won, aiming to safeguard depositors in cases of bank insolvencies. This change is set to take effect next year, following the recent approval of a bill by the National Assembly to better align deposit insurance with the nation's economic growth. Additionally, an alternative trading system (ATS) is anticipated to launch in the first half of 2024 to enhance the efficiency of securities trading.
According to Yonhap News Agency, the revision of the deposit protection ceiling, which has remained unchanged since 2001, will be implemented within a year of its promulgation. The Financial Services Commission (FSC) stated that the introduction of the ATS is expected to bring significant changes to the stock exchange sector, which is currently monopolized by the Korea Exchange, established in 1956. The new system aims to provide greater convenience and efficiency for traders.
In addition to these developments, the FSC announced plans to resume stock short selling on March 31. This decision follows the establishment of a monitoring platform designed to identify illegal short selling transactions. South Korea had imposed a temporary ban on short selling in November 2023 after uncovering allegations of naked short selling by several global investment banks. Originally scheduled to be lifted before July, the ban has now been extended until March 30.
Short selling has been a subject of political debate in South Korea, with retail investors frequently attributing declines in stock prices to the practice. The FSC's decision to resume short selling is likely to stir further discussions among market participants and regulators.