SEOUL (Reuters) – South Korea’s inventory market watchdog mentioned on Sunday it discovered two Hong Kong-based funding banks had engaged in bare short-selling, which might probably lead to report fines.

The 2 unnamed funding banks made bare short-selling transactions of a complete 40 billion received ($29.58 million) and 16 billion received, respectively, the Monetary Supervisory Service (FSS) mentioned in a press release.

Bare quick promoting of shares – during which an investor quick sells shares with out first borrowing them or figuring out they are often borrowed – is banned by the Capital Markets Act in South Korea.

The violations by the worldwide banks have been over lengthy durations, for 9 months via Could 2022 and 5 months via December 2021, respectively, and anticipated to lead to report quantities of fines, the FSS mentioned.

The FSS mentioned such violations, which got here towards authorities’ efforts to offer a extra beneficial surroundings for overseas traders, ought to be prevented from recurring and that it might additionally look into practices at different comparable funding banks.

($1 = 1,352.2100 received)