October 24, 2012
Financial Services Agency
FSA extends temporary measures regarding restrictions on short selling and purchase of own stocks by listed companies
1. The following regulatory measures on short selling are currently in place, with regard to all listed stocks in Japan:
1) An "uptick rule requirement" which prohibits, in principle, short selling at the same as or prices lower than the latest market price;
2) Requirements for traders to verify and flag whether or not the transactions in question are short selling; and
3) Request the exchanges to make daily announcements on their aggregate price of short selling regarding all securities and aggregate price of short selling by sector (Announcements have been made sequentially since October 14, 2008). (See the FSA press release on October 14, 2008.)
In addition, the Financial Services Agency (FSA) has put in force the following measures, as temporary measures effective until October 31,2012 (See the FSA press release on April 20, 2012.):
1) Naked short selling (short selling in which stocks are not borrowed at the time of selling) is prohibited (effective since October 30, 2008); and
2) Holders of a short position of a certain level or more (in principle, 0.25 percent or more of outstanding issued stocks) are required to report to exchanges through securities firms. Exchanges are required to publicly disclose such information (effective since November 7, 2008).
2. Regarding the purchase of own stocks by listed companies, taking into consideration the situation of Japan's capital markets, the following restrictions have been temporarily relaxed over the period from October 14, 2008, to October 31,2012. (See the FSA press release on April 20, 2012.)
1) Upper limit on the daily purchase volume
The limit will be raised from the current 25% to 100% of average daily trading volume during the four weeks immediately preceding the repurchase.
2) Timing of purchase
Companies are currently required to repurchase their own stocks during hours other than the 30 minutes immediately before the close of trading. This restriction will be lifted.
3. The FSA decided to further extend these temporary measures until April 30, 2013. To this end, the Cabinet Office Ordinances and FSA Regulatory Notices necessary for these extensions will be promulgated before expiry of these measures by the end of October, 2012.
4. In addition, the FSA will proceed to consider a more perpetual system pertaining to short selling, taking into account trends of restrictions in the United States and Europe, etc.
Financial Services Agency
Tel +81-(0)3-3506-6000 (main)
Financial Markets Division, Planning and Coordination Bureau
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