October 27, 2008
Financial Services Agency
FSA strengthens restrictions on short selling
The Financial Services Agency (FSA) decided today to take additional measures to strengthen the restrictions on short selling of stocks.
- The following regulatory measures have already been taken on short selling with regard to all listed stocks in Japan:
1) An "uptick rule requirement" which prohibits, in principle, short selling at prices no higher than the latest market price
2) Requirements for traders to verify and mark whether or not the transactions in question are short selling
3) Request on exchanges to make daily announcements on their aggregate price of short selling regarding all securities and aggregate price of short selling by sector (The announcements sequentially started from October 14.) (See the FSA press release on October 14, 2008.)
- In addition, the FSA has decided to take the following measures, and will amend the relevant regulations immediately. For the time being, these measures are temporary measures effective until March 31, 2009.
1) Naked short selling (short selling in which stocks are not borrowed at the time of selling) is prohibited (scheduled to be implemented on Tuesday, November 4, 2008).
* This prohibition measure was implemented earlier than scheduled on Thursday, October 30, 2008.
2) Holders of a short position of a certain level or more (in principle, 0.25 percent or more of outstanding stocks) are required to report to exchanges through securities firms. Exchanges are required to publicly disclose such information (scheduled to be implemented around mid-November 2008).
* This reporting requirement measure was implemented earlier than scheduled on Friday, November 7, 2008.
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