South Korean regulatory authorities are considering implementing a "Short Selling Ban" to address the stock market's sharp decline.

July 30th, according to Yonhap News Agency, Korean exchanges recently examined the technical feasibility of a temporary short-selling ban and narrowing the stock price fluctuation limit to evaluate emergency measures that can be used in the event of a sharp market decline. The related examination includes whether the system can execute the changes and the time required to complete the adjustments, but insiders emphasized that it is currently only confirmed to be technically feasible, not based on the premise of actual implementation.

The Korean exchanges also evaluated the possibility of further reducing the current 30% daily price fluctuation limit to restrict individual stock price drops during extreme market conditions. The South Korean Ministry of Economy and Finance previously held an emergency market situation inspection meeting and stated that considering the high volatility of the Korean stock market compared to other countries and historical levels, they would maintain the highest state of alert and initiate a joint 24-hour monitoring mechanism involving relevant departments.

With the continuous plunges in the Korean stock market, a temporary short-selling ban has become one of the retail investors' main demands. A related parliamentary petition has received support from about 10,000 people within two days, and some lawmakers have also suggested restarting the stock market stabilization fund. Korean brokerage analysts stated that as it will take time for individual stock leveraged ETF deleveraging to take place, banning short-selling may help control further declines.

However, the short-selling ban may conflict with South Korea's goal of being included in the MSCI Developed Market Index. An official from the Korean exchanges stated that they have not received any relevant government requests, have not formally studied the short-selling ban, and that this measure is not something the exchanges can decide on their own.