Financial Supervisory Service Senior Deputy Gov. Hahm Yong-il (Yonhap)

The Financial Supervisory Service officials visited Hong Kong to seek cooperation with financial authorities and investment banks there for the regulator’s efforts to stamp out illegal short selling.

During his two-day visit from Thursday, a delegation led by FSS Senior Deputy Gov. Hahm Yong-il met executives in charge of the Asia-Pacific region at seven global investment banks to inform them about the Korean government’s plan to set up a monitoring system designed to detect illegal short selling of domestic stocks.

He asked for support from institutional investors as their system improvement and internal control essential for the effective operation of the checking system and ensured that the

Hahm also promised that the adoption of the system would cause no market trading disruptions. It will electronically process all short selling transactions by institutional investors and filter them through a central detection system set up at the stock exchange operator.

“Global investment banks agreed with the intent of the set-up of the system and showed their willingness for coordination,” the FSS said.

On Friday, Hahm held a talk with Hong Kong’s Securities and Futures Commission CEO Julia Leung Fung-yee to discuss ways to strengthen collaboration between the two bodies.

The FSS’ ongoing investigation into naked short selling activities involving Hong Kong-based companies was also on the table.

They agreed to continue to push for measures for swift data sharing and mutual assistance for the investigation, according to the Korean financial watchdog.

“We will wrap up the investigation on global investment banks’ naked short selling quickly and actively communicate with investors to improve system and transaction rules tied to short-selling,” a FSS official said.

After discovering illegal trading by two foreign firms in November last year, Korean authorities prohibited short selling of stocks in the domestic market until June this year.

FSS Gov. Lee Bok-hyun on Thursday hinted at the end of short selling bank as planned. "My personal hope or plan is to partially resume short stock selling in June," he said during an investor relations event in New York.

He said there are some technical and legal issues to be resolved in developing the short selling monitorin