Regional market · Taiwan & Korea
Navigating Securities Finance in Taiwan and South Korea
Taiwan and South Korea are large equity markets with strong institutional interest, but both run stricter, more procedural securities lending regimes than Hong Kong or Japan. Offshore participants need onshore accounts, pre-borrowing evidence and careful reporting.
Last reviewed 27 October 2026
Side-by-side comparison
| Topic | Taiwan | South Korea |
|---|---|---|
| Main regulator | Financial Supervisory Commission (FSC); exchange rules from TWSE and TPEx | Financial Services Commission (FSC) and Financial Supervisory Service (FSS); exchange rules from KRX |
| Short selling basis | Covered; borrow required before sale | Covered; naked short selling prohibited and penalised |
| Lending channels | Exchange SBL platform and negotiated over-the-counter lending | Lending through domestic securities firms and the central depository's lending service |
| Collateral | Onshore collateral rules apply; commonly cash | Onshore collateral rules apply; specific requirements for foreign investors |
| Recent changes | Periodic adjustments to pricing and borrowing rules | Market-wide short selling ban from November 2023, with resumption in 2025 alongside new controls |
Taiwan: TWSE borrowing mechanisms
Taiwan offers both a centralised exchange-run SBL facility with standardised terms and negotiated lending between counterparties. Foreign investors use their onshore custodian and local broker. Borrowed shares must be in place before a short sale, and returns and recalls follow defined timelines.
South Korea: short selling regulation
Korea tightened rules after detecting naked short selling by some institutions. Following the market-wide ban, regulators introduced requirements for institutional short sellers to run internal control systems that prevent uncovered sales, together with central monitoring and stronger penalties. Disclosure and reporting apply to positions above set thresholds on KOSPI and KOSDAQ stocks.
Operational checklist
- Open and maintain onshore accounts and investor registration where required.
- Keep evidence of borrow before order entry and record short flags correctly.
- Track reporting thresholds and deadlines for each exchange.
- Plan for FX controls when posting or returning cash collateral.