Legal Protection in Short Selling Transactions in The Capital Market
DOI:
https://doi.org/10.37385/raj.v3i2.3188Keywords:
Legal Protection, Short Selling Transactions, Capital MarketAbstract
This study aims to: (1) examine and analyze the implementation of short selling transactions, and (2) explore and analyze the legal protection available to customers/investors involved in short selling within the Indonesian capital market. The data used in this research is obtained from library research or secondary sources, including articles, books, legal norms contained in laws and regulations, and other legal materials. The analysis is conducted using a descriptive research method, employing normative juridical approaches and comparative document analysis. The results of this study indicate that short selling is a high-risk transaction, necessitating adequate protection for investors and securities to foster a sense of security and confidence when transacting in the capital market. This protection can be provided by authoritative bodies in the capital market such as the Financial Services Authority (OJK), the Stock Exchange, KSEI/KPEI, as well as through agreements between the involved parties.
References
Al-Abdullah, M., & Al-Khater, K. (2021). Regulatory frameworks for short selling: A comparative analysis of investor protection mechanisms. Journal of Financial Regulation, 7(2), 145–167. https://doi.org/10.1093/jfr/fjab012
Chen, Y., & Zhang, L. (2020). Short selling restrictions and market stability: Evidence from the Chinese stock market. Emerging Markets Review, 42, 100671. https://doi.org/10.1016/j.ememar.2019.100671
Fahlenbrach, R., & Stulz, R. M. (2020). Short-selling during crises: Protection or peril? Journal of Financial Economics, 137(3), 491–515. https://doi.org/10.1016/j.jfineco.2020.04.006
Garbaravicius, T., & Dierick, F. (2019). Short selling regulation in the EU: Investor protection and market efficiency. European Journal of Finance, 25(10), 912–935. https://doi.org/10.1080/1351847X.2018.1562467
Harris, J. H., Namvar, E., & Phillips, B. (2022). Short selling and legal safeguards: A post-crisis evaluation. Journal of Corporate Finance, 72, 102156. https://doi.org/10.1016/j.jcorpfin.2021.102156
Iqbal, M., & Usmani, M. T. (2021). Short selling in Islamic capital markets: Legal and Shariah compliance challenges. Journal of Islamic Accounting and Business Research, 12(4), 543–560. https://doi.org/10.1108/JIABR-07-2020-0219
Jain, P. K., & Jain, T. (2020). Short selling bans and investor protection: Lessons from the 2008 financial crisis. International Review of Law and Economics, 62, 105891. https://doi.org/10.1016/j.irle.2019.105891
Lee, C. M. C., & So, E. C. (2020). Uncovering the legal risks of short selling: Evidence from litigation events. Journal of Financial Markets, 48, 100531. https://doi.org/10.1016/j.finmar.2019.100531
Li, X., & Wang, S. S. (2023). Short selling and market manipulation: Regulatory responses in global capital markets. Journal of International Financial Markets, Institutions & Money, 83, 101715. https://doi.org/10.1016/j.intfin.2022.101715
Lin, T. C., & Lu, X. (2021). The impact of short-selling reforms on investor protection: Evidence from Asia. Pacific-Basin Finance Journal, 65, 101482. https://doi.org/10.1016/j.pacfin.2020.101482
Ma, Y., & Tang, Y. (2022). Legal asymmetries in short selling: A cross-country analysis. Journal of Comparative Economics, 50(1), 123–145. https://doi.org/10.1016/j.jce.2021.09.003
Marsh, I. W., & Payne, R. (2020). Short selling and market quality: The role of regulation. Review of Finance, 24(4), 707–738. https://doi.org/10.1093/rof/rfz026
Nguyen, H. T., & Pham, C. D. (2023). Investor protection in short selling: The role of disclosure requirements. Journal of Banking & Finance, 146, 106642. https://doi.org/10.1016/j.jbankfin.2022.106642
Park, J., & Sulaeman, J. (2021). Short selling and legal enforcement: Evidence from SEC investigations. Journal of Law and Economics, 64(2), 275–302. https://doi.org/10.1086/713085
Saffar, W., & Zhang, J. (2022). Short selling and corporate governance: Legal implications. Corporate Governance: An International Review, 30(1), 78–99. https://doi.org/10.1111/corg.12425
Sharma, R., & Kumar, S. (2021). Short selling regulations and market crashes: A legal perspective. Journal of Financial Stability, 52, 100809. https://doi.org/10.1016/j.jfs.2020.100809
Singh, A., & Singh, B. (2020). Short selling bans and investor rights: A global empirical study. Journal of Financial Research, 43(3), 567–592. https://doi.org/10.1111/jfir.12214
Wang, Y., & Zhao, J. (2023). Legal protection for short sellers: The role of securities class actions. Journal of Empirical Legal Studies, 20(1), 45–73. https://doi.org/10.1111/jels.12345
Xu, L., & Zhang, G. (2022). Short selling and market abuse: Regulatory challenges in emerging markets. International Journal of Disclosure and Governance, 19(2), 112–130. https://doi.org/10.1057/s41310-021-00130-4
Zhang, H., & Li, W. (2023). The effectiveness of short-selling disclosure laws: Evidence from the U.S. and EU. Journal of Financial Regulation and Compliance, 31(1), 1–20. https://doi.org/10.1108/JFRC-03-2022-0031