How Korean Short Selling Works (and When It Gets Banned)
Short Selling in Korea: Overview Short selling in Korea is heavily regulated compared to the US market. Korea has a history of temporarily banning short selling during market crises, which is a unique characteristic of the KRX. Types of Short Selling in Korea 1. Covered Short Selling Borrowing shares before selling Legal and allowed (with restrictions) Must have borrowed shares confirmed before selling 2. Naked Short Selling Selling shares without borrowing them first Illegal in Korea Heavy penalties for violations Who Can Short Sell? Investor Type Short Selling Allowed? Foreign institutional investors Yes Domestic institutional investors Yes Retail investors Yes (since 2025) Korea’s Short Selling Bans Korea has banned short selling multiple times: ...