South Korea Imposes Fines on Major Banks for Short-Selling Violations

​South Korea’s financial regulator has fined four major international banks — JPMorgan Chase, Morgan Stanley, Nomura, and UBS — for breaching the country's short-selling regulations, according to officials from the Financial Supervisory Service (FSS). The penalties come as part of ongoing efforts to address illegal trading activities in the domestic stock market.

The fines were announced after a decision made on Wednesday by the Securities and Futures Commission, which had conducted an investigation into short-selling activities. While the FSS did not provide specific details on the amounts of the fines or the exact violations, the decision is part of South Korea's broader effort to rein in improper short-selling practices, particularly "naked" short-selling, which involves selling shares without borrowing them beforehand.

In November 2023, South Korea implemented a market-wide short-selling ban to curb potential market abuses, a measure that was unpopular among retail investors. In January 2024, media reports revealed that South Korean authorities were considering fines for two Hong Kong-based banks accused of engaging in naked short-selling, a practice where investors sell shares they do not own. The short-selling ban is set to be lifted in March 2025, when authorities plan to have a system in place to monitor and detect illegal trades.These latest penalties highlight South Korea’s firm stance on enforcing compliance with market regulations, even as it plans to reintroduce short-selling once it is able to address concerns about its potential for market disruption.

Representatives from JPMorgan, Morgan Stanley, UBS, and Nomura declined to comment on the fines. Notably, South Korea has previously fined other banks, such as Barclays and Citigroup, for violations related to naked short-selling. In 2023, BNP Paribas and HSBC were fined for similar breaches, although HSBC was later acquitted of the charges in February 2025.

The South Korean government has been focused on tightening its grip on illegal short-selling as part of its broader efforts to maintain the stability of its financial markets, with further regulatory measures expected as the system evolves.