The HSBC headquarters stand in the financial district of Canary Wharf, in London, March 13, 2023. (PHOTO / AP)

South Korea's financial watchdog has recommended imposing a fine of at least 10 billion won ($7.67 million) each on HSBC Holdings and BNP Paribas for naked short selling, Bloomberg News reported on Wednesday citing two people familiar with the matter.

Last month, South Korea reimposed a full ban on short-selling until the end of June 2024 to create a "level playing field" for retail and institutional investors

The five-member commission led by Financial Services Commission (FSC) Vice-Chairman Kim So-young discussed the fines during a meeting on Wednesday but could not reach a conclusion, the report said, adding that the final amount may change during discussions later.

FSC is a government agency with the statutory authority over financial policy and regulatory supervision.

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Naked short-selling of stocks - in which an investor short sells shares without first borrowing them or determining they can be borrowed - is banned by the Capital Markets Act in South Korea.

"We are investigating financial companies involved in naked short-selling, but we cannot comment whether fines have been finalized," an FSC official said.

HSBC and BNP Paribas did not immediately respond to Reuters' request for comment.

Last month, South Korea reimposed a full ban on short-selling until the end of June 2024 to create a "level playing field" for retail and institutional investors.