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South Korea's financial regulator is set to impose fines on major global banks, including JPMorgan Chase & Co., Morgan Stanley, UBS Group AG, and Nomura Holdings Inc., for allegedly violating the country's short-selling regulations, as reported by the Maeil Business Newspaper.

This follows a 2023 investigation where 14 banks were found in breach of short-selling rules. The fines are expected to be finalized before South Korea lifts its ban on short-selling next month, which was introduced over a year ago to address improper practices in the market.

The Financial Services Commission (FSC) held a meeting on Wednesday to discuss the penalties, although details such as the amount of the fines or whether an official announcement will be made have not been disclosed. An FSC spokesperson declined to comment on the matter.

The regulatory move, if confirmed, highlights South Korea's determination to enforce stricter oversight on entities violating short-selling rules, even as the country prepares to lift its ban. Short-selling, which has been criticized for contributing to market instability, is particularly unpopular with retail investors. 

The government had imposed the short-selling ban in November 2023 to curb abuses within the system, especially targeting illegal "naked" short-selling, where stocks are sold without first borrowing them. 

In December, Barclays Plc and Citigroup Inc. were fined 13.7 billion won ($9.5 million) and 4.7 billion won, respectively, for similar violations. BNP Paribas and HSBC Holdings were also fined a total of 26.5 billion won in 2023 for breaching short-selling rules, although HSBC was later acquitted in February by a South Korean court. Additionally, two affiliates of Credit Suisse Group paid a combined 27.1 billion won last year for their involvement in similar activities.

Paraphrasing text from "Bloomberg"all rights reserved by the original author