South Korea’s financial watchdog announced on Friday that it would extend the country’s short-selling ban until March 31, 2025 to allow time for the implementation of a new system to detect illegal naked short selling. 

While the Financial Services Commission (FSC) framed this extension as necessary to protect retail investors and restore market stability, the decision introduces significant risks to South Korea’s financial market, threatening to spook foreign investors by increasing uncertainty and threatening to curtail short-selling activity.