S. Korea to ban short selling, raise share buyback ceiling

SEOUL, Sept. 30 (Yonhap) -- South Korea's financial watchdog said Tuesday that it
will ban short selling of stocks for the time being as part of efforts to
minimize the fallout from a rejected U.S. financial bailout.

The Financial Services Commission said it will also raise the daily limit on
share repurchases to 10 percent from the current 1 percent.
The short selling ban will go into effect on Wednesday, with the duration to be
determined at a later date depending on the market situation, it said. The
increased ceiling on share buybacks will be effective until the end of the year,
the watchdog said.
The U.S. stock market plunged on Monday after the U.S. House of Representatives
rejected a US$700 billion financial bailout. The Dow Jones industrial average
lost 778 points, its largest point decline ever, and posted its biggest daily
percentage slide since the 1987 stock market crash.
Short selling refers to the practice in which investors sell shares by borrowing
them in anticipation of price falls. Short sellers can make profits by buying
back shares at a lower price and then returning them. Short selling has been
blamed for amplifying financial market jitters by sparking price falls.