The Korea Exchange has recently initiated the development project to establish a central inspection system for short selling.

The Korea Exchange, which plays a pivotal role in computerizing the short selling system, has recently initiated the development project to establish a central inspection system for short selling. The goal is to launch the short selling computer system by the end of March next year, with the aim of consistently detecting illegal short selling, specifically naked short selling across all sell orders.

In June, the government and ruling party announced the final plan for improving the short selling system, emphasizing the mandatory implementation of internal balance management computer systems within institutions and the introduction of a central monitoring system at the exchange for short selling. Based on this, the government has stated its intention to resume short selling by March 31 next year.

Given the premise of constructing the short selling computer system, the exchange plans to complete the recruitment of contractors for detailed work on the computer system early next month before commencing development to meet its schedule.

The exchange plans to allocate approximately 1.4 billion won to establish three independent systems for collecting, processing, and managing short selling balance information. First, it will gather and input daily individual investor short selling balances, transaction history changes, and real-time trading data into the system. Based on this data, the exchange aims to automatically detect illegal short selling daily by analyzing changes in balance for each investor and comparing the acquired trading information.

In addition, the industry is actively preparing related systems. With the government deciding to limit the repayment period of collateral loans for institutional short selling to 90 days, similar to individuals, there are plans to develop a system to enforce this restriction and conduct a pilot run around October.