Regulators overseas are now tripling fines in naked short selling, a way to combat the illegal market manipulation practice.

The Stock Exchange of Thailand (SET) has introduced a stricter fine structure for its member brokerages, notably increasing penalties for naked short selling.

Beginning November 1, the fine for this illegal practice will increase to three times the illicit profits made, with a newly established minimum penalty of 1 million baht, as reported by the Bangkok Post.

Previously, the penalties only matched the profits without a minimum fine, as stated by the SET.

Naked short selling involves selling a security without first borrowing it or confirming its availability for borrowing.

In contrast, legal short-sellers aim to profit from a decline in a stock’s price by borrowing shares, selling them, and then repurchasing them at a lower price.

Earlier this year, market regulators heightened their oversight due to rising investor complaints about volatility linked to both legal and illegal short selling.

This included the implementation of an “uptick rule” designed to limit price movements under specific conditions.

In its recent statement, the SET outlined that it would categorize brokerage violations into four main areas:

1. Trading, program trading, installation sites, and hardware network connections
2. System-based trading supervision by members
3. Membership qualifications and responsibilities
4. Trading activities

The SET noted that fines for various offenses have been considerably raised to better reflect the seriousness of the violations and their potential impact on the market.

For instance, brokers who fail to make timely margin calls will now face fines of 30,000 baht, increased from the previous amount of 10,000 baht.

In South Korea, regulators have also brought the hammer down on naked short selling, enforcing larger fines than ever before.

The country has even implemented sentencing illegal short sellers to life in prison.

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Also Read: Illegal Short Sellers Will Now Face Life Sentence In Prison

More on South Korea Markets

• South Korea Now Finds Banks Pursued Illegal Shorting Scheme
• South Korea Now Speaks on Impact of Illegal Short Selling
• Korean Regulators Now Impose Billions In Fines For Illegal Trading
• Citadel High Frequency Trading: Fined by Korea’s Regulators

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