Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Event-Driven

Korea Stock Exchange Kospi Index / Event-Driven

<ul>
<li>The Constitutional Court approved President Yoon’s impeachment. The PM steps in as interim president, with a new election expected by May 28, 2025, before June 3.</li>
<li>The Democratic Party is the frontrunner, and if they win, expect a "regime change trade" with policy shifts toward green energy, welfare, public stimulus, and SME-focused initiatives.</li>
<li>Big-Cap builders, nuclear stocks, and major financials may struggle if the new regime focuses on public housing, anti-nuclear policies, and pro-SME, labor-friendly initiatives.</li>
</ul>


The Constitutional Court approved President Yoon’s impeachment. The PM steps in as interim president, with a new election expected by May 28, 2025, before June 3.
The Democratic Party is the frontrunner, and if they win, expect a "regime change trade" with policy shifts toward green energy, welfare, public stimulus, and SME-focused initiatives.
Big-Cap builders, nuclear stocks, and major financials may struggle if the new regime focuses on public housing, anti-nuclear policies, and pro-SME, labor-friendly initiatives.


Yoon’s Impeachment Confirmed: Key Timeline & Regime Change Trade

<ul>
<li>Today’s update clarifies which brokers are fully linked to NSDS, giving them an edge in short-selling speed and flexibility, while others face more execution constraints.</li>
<li>This leads to a clear execution risk gap, requiring traders to factor in trade efficiency differences based on their broker.</li>
<li>With lower short-selling restriction triggers, liquidity and short-covering dynamics will shift, requiring traders to reassess market impact and adjust strategies accordingly.</li>
</ul>


Today’s update clarifies which brokers are fully linked to NSDS, giving them an edge in short-selling speed and flexibility, while others face more execution constraints.
This leads to a clear execution risk gap, requiring traders to factor in trade efficiency differences based on their broker.
With lower short-selling restriction triggers, liquidity and short-covering dynamics will shift, requiring traders to reassess market impact and adjust strategies accordingly.


Korea’s FSC Just Dropped the Final Playbook on the Full Restart of Short Selling.

<ul>
<li>Local instos borrow from brokers or peers, KSD collects and cleans the data, then KOFIA reports stock borrow balances daily with a two-day lag.</li>
<li>Offshore borrows via EquiLend or PB deals don’t show up—KSD reporting only covers local institution-to-institution stock loans.</li>
<li>Assume 60% of reported borrow balance is real shortable ammo—adjusting for this helps filter out noise in short positioning.</li>
</ul>


Local instos borrow from brokers or peers, KSD collects and cleans the data, then KOFIA reports stock borrow balances daily with a two-day lag.
Offshore borrows via EquiLend or PB deals don’t show up—KSD reporting only covers local institution-to-institution stock loans.
Assume 60% of reported borrow balance is real shortable ammo—adjusting for this helps filter out noise in short positioning.


Properly Interpreting Korea's Stock Borrow Data for Short Selling

<ul>
<li>If brokers let shorts exceed borrow, TRS end investors risk getting caught in the legal crossfire.</li>
<li>Some TRS players are setting up short-book systems and reg numbers proactively, ensuring brokers share borrow data to stay ahead of any compliance risks.</li>
<li>With most illegal shorts tied to TRS, and TRS dominating the market, the FSS will likely introduce TRS-specific rules rather than granting exemptions.</li>
</ul>


If brokers let shorts exceed borrow, TRS end investors risk getting caught in the legal crossfire.
Some TRS players are setting up short-book systems and reg numbers proactively, ensuring brokers share borrow data to stay ahead of any compliance risks.
With most illegal shorts tied to TRS, and TRS dominating the market, the FSS will likely introduce TRS-specific rules rather than granting exemptions.


Biggest Gray Area in Korea’s Short-Selling Overhaul: What Should TRS Clients Do?

Equity Derivatives and Volatility Specialist, Clifton Derivatives

John Ley

Equity Derivatives and Volatility Specialist

Clifton Derivatives

Independent derivative and volatility research firm focusing on events/catalysts, earnings, relative value and cross asset volatility strategies.

Equity Derivatives

Korea Stock Exchange Kospi Index / Equity Derivatives

<ul>
<li>Kospi rebounds from weak performance at the start the week to finish essentially unchanged.</li>
<li>1M implied vol came off 2.3 points and is now at the 22nd percentile over the past year.</li>
<li>Thursday’s 1.44% gain saw overwhelming Call activity with 3.6 Calls trading for every Put.</li>
</ul>


Kospi rebounds from weak performance at the start the week to finish essentially unchanged.
1M implied vol came off 2.3 points and is now at the 22nd percentile over the past year.
Thursday’s 1.44% gain saw overwhelming Call activity with 3.6 Calls trading for every Put.


EQD | Kospi Index Options Weekly (January 13 – 17): Heavy Call Volume on Thursday’s Gain.

South Korea

The KOSPI Index is a capitalization-weighted index of all common shares on the Korean Stock Exchanges. The Index was developed with a base value of 100 as of January 4, 1980. Note: The preferred shares are excluded in calculating the KOSPI Index from June 14, 2002. 

Korea Stock Exchange Kospi Index (KOSPI INDEX)

Korea Stock Exchange Kospi Index (KOSPI INDEX)

Yoon’s Impeachment Confirmed: Key Timeline & Regime Change Trade

Yoon’s impeachment confirmed: What is the immediate impact on the local stock market, and which sectors are likely to move.

Sanghyun Park

Korea’s FSC Just Dropped the Final Playbook on the Full Restart of Short Selling.

Korea’s FSC just rolled out the final rulebook for the full-scale comeback of short selling. Here’s a breakdown of all the key details we traders...

Sanghyun Park

Properly Interpreting Korea's Stock Borrow Data for Short Selling

This post covers how to cut through the noise and properly interpret Korea’s stock borrow data, so we can gauge real short-selling flows more...

Sanghyun Park

Biggest Gray Area in Korea’s Short-Selling Overhaul: What Should TRS Clients Do?

This post examines the biggest gray area in Korea’s short-selling overhaul—how TRS clients should navigate the new electronic tracking rules and...

Sanghyun Park

EQD | Kospi Index Options Weekly (January 13 – 17): Heavy Call Volume on Thursday’s Gain.

Kospi rebounds after a soft start to finish flat after strong Thursday gains, with high Call activity and decreased implied volatility.

John Ley

Yoon’s Impeachment Confirmed: Key Timeline & Regime Change Trade

Yoon’s impeachment confirmed: What is the immediate impact on the local stock market, and which sectors are likely to move.

Sanghyun Park

Korea’s FSC Just Dropped the Final Playbook on the Full Restart of Short Selling.

Korea’s FSC just rolled out the final rulebook for the full-scale comeback of short selling. Here’s a breakdown of all the key details we traders...

Sanghyun Park

Properly Interpreting Korea's Stock Borrow Data for Short Selling

This post covers how to cut through the noise and properly interpret Korea’s stock borrow data, so we can gauge real short-selling flows more...

Sanghyun Park

Biggest Gray Area in Korea’s Short-Selling Overhaul: What Should TRS Clients Do?

This post examines the biggest gray area in Korea’s short-selling overhaul—how TRS clients should navigate the new electronic tracking rules and...

Sanghyun Park

EQD | Kospi Index Options Weekly (January 13 – 17): Heavy Call Volume on Thursday’s Gain.

​Kospi rebounds after a soft start to finish flat after strong Thursday gains, with high Call activity and decreased implied volatility.

John Ley

Kospi rebounds after a soft start to finish flat after strong Thursday gains, with high Call activity and decreased implied volatility.