| Possible Unfair Trades Using Short-Sale |
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Jee-Hyun Kim, Min-Cheol Woo |
| 공매도를 이용한 불공정거래 개연성 |
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김지현, 우민철 |
1한림대학교
2한국거래소 |
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| Abstract |
In recent years, short selling has received fierce criticism from society at large in Korea. Many individual investors consider that it is immoral and should be abolished. Recent events including a fat-finger error by Samsung Securities and unsettled short sales by Goldman Sachs reinforce this negative view of short selling.
This study is motivated by the fact that, compared to the overall negative perception of short selling, only a handful of cases were actually punished by the financial investment services and capital markets act (FSCMA). The paper re-examines the controversy surrounding short selling by focusing on possible unfair trade practices conducted based on the wrongful use of it.
The possible unfair trade practices by short sellers are categorized as follows in this paper: First, short sales reaping unfair profits using unpublished information. Second, short sales gaining unfair profits using block trading before other market participants receive the information. Third, practices of driving a share price down by placing a large amount of spoofing quotes on the sell side. Lastly, price manipulation by reporting falsely as arbitrage or hedge trading to avoid the uptick rule for short selling. We expect that, by sorting out short selling practices engaged in unfair trading behavior and applying enhanced regulation to them, short selling can facilitate its positive role properly in financial markets. |
| Key Words:
Spoofing Quotes,공매도,자본시장법,시간외 대량매매,업틱룰,허수성호가,Short Sales,Financial Investment Services and Capital Markets Act(FSCMA),Block Trading,Uptick Rule |
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