Press Releases - Financial Services Commission

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Aug 24, 2017

Rules on Overheated Short Sale Issues to be Amended

The FSC and Korea Exchange (KRX) announced a plan to amend regulations regarding overheated short sale issues, which came into force on March 27, 2017, in a bid to better detect overheated short sales and toughen penalties on violations of short-selling rules.For the past four months since the rules on designation of overheated short-selling stocks were introduced in March, KRX suspended trading of “overheated short–selling stocks” five times on the KOSPI market and six times on the KOSDAQ market.However, it has been pointed out that the criteria for designation of overheated short-sale issues are too narrow to verify more short sales deemed overheated2; and penalties for violations of short sale rules are too lenient to be effective.PROPOSED AMENDMENTSI. AMENDING CRITERIA FOR DESIGNATING “OVERHEATED SHORT-SELLING ISSUES”1. Key changesCurrently, short-sale issues are designated as “overheated issues” when:(i) short-selling value of a trading day accounts for 20% or more(KOSPI) and 15% or more(KOSDAQ) of total trading value of the day;(ii) the proportion of short sales value of the day increases 100% or more, compared to the average of the 40 trading days; and(iii) the stock price falls 5% or more, compared to the closing price of the previous day.The criteria will be amended to detect overheated short sale issues in a bull market and adjusted periodically depending on market situations.(i) The “proportion of short-selling” criterion3 will be lowered from the current 20% to 18% (KOSPI); and from 15% to 12% (KOSDAQ) out of total trading value of the day.* The criterion will not be applicable to issues whose price experiences a sharp drop of more than 10%; or KOSDAQ-listed issues whose proportion of short sales of a trading day accounts for more than 5% of the average of the preceding 40 days.(ii) The “increase rate of short-selling value” will replace the criterion of “increase rate of short selling proportion”* Short sale issues are designat
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Aug 02, 2017

FSC Tightens Mortgage Rules to Curb Speculative Demand in Housing Market

The government announced a package of measures that designate some “overheated” or “bubble-prone areas” in Seoul, Busan and other major cities and discourage speculative buying in the designated areas. As part of the government’s effort, the FSC will tighten loan-to-value (LTV) and debt-to-income (DTI) rules to curb speculative demand in the housing market.MORTGAGE RULES TO BE TIGHTENED IN BUBBLE-PRONE AREASLTV and DTI ratios will be tightened to 40% for home buyers in the designated regions, regardless of types of housing, amount and maturity of such mortgages.※ To protect real demand for housing, the ratios of both LTV and DTI will be relaxed to 50% for first-home buyers, low-income households with annual income of less than KRW 60 million, or low-price housing of less than KRW 600 million.TIGHTER MORTGAGE RULES FOR MULTIPLE HOME OWNERSFor mortgage borrowing by a household to own multiple homes, LTV will be tightened by a further 10%p across the country, while DTI will be tightened by 10%p for home buyers in the designated areas.FSC Chairman Choi Jongku immediately convened an extraordinary session with FSC commissioners to discuss needed revisions to relevant regulations so that new mortgage rules could become effective as soon as possible. Chairman Choi also held a meeting with heads of the FSS and financial institutions to ask closer monitoring to make sure expected tightening of mortgage rules should not result in a sudden surge in borrowing before the new rules take effect.* Please read the attached file for details.
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