An 8-month suspension on stock short selling went into effect on Monday and will continue until next June. Financial Services Commission (FSC) announced the ban on Sunday, explaining that the move seeks to curb stock market volatility and ensure market stability and fair pricing. The decision follows the Financial Supervisory Service's (FSS) initiative to investigate illegal short-selling activities among global investment banks dating back to May 2021. During a parliamentary audit last month, FSS Chief Lee Bok-yeon went so far as to suggest that criminal penalties might be applied to both South Korean nationals and foreigners involved, in response public outrage over unlawful short-selling.

Shortly after the FSC’s announcement on Sunday, the ROK Presidential Office said that President Yoon Suk-yeol considers illegal short selling a grave social “malady.” The immediate impact of the short-selling ban was evident when the market closed on Monday after the KOSPI soared by up to 5.7%, marking its most significant leap since March 2020 near the beginning of the pandemic. Short selling, the practice of selling borrowed stocks in hopes of profiting from a price decline, is typically seen as a means to align stock prices more closely with actual company value, thereby bolstering market confidence.