"MSCI is not our goal. It'd be good to win in the process (of improving market efficiencies) but it's not the direct and most important goal we seek," said Kim So-young, vice chairman at the Financial Services Commission in a news conference in Seoul.

South Korea on Nov. 5 said it is banning stock short-selling until June 2024 to improve rules and systems, inviting criticism that it will make the market less transparent and reduce liquidity at a time when the government is working to convince MSCI to promote South Korea from an emerging to a developed market in its next annual market classification review.

Kim said the government's goal is to root out "naked" short selling, an illegal practice that involves selling shares without even borrowing stocks.

He added the government is not sure whether the ban will be lifted or not after June 2024.

In June, MSCI kept Asia's fourth-largest economy on its list of emerging markets following an annual review, saying the country needs to enhance accessibility for foreign investors before it can win an upgrade to the coveted developed-market status.

(Reporting by Jihoon Lee; Writing by Cynthia Kim; Editing by Ed Davies and Stephen Coates)

By Jihoon Lee