October 13, 2008
Financial Services Agency
FSA relaxes market restrictions regarding purchase of own stocks by listed companies
- From the viewpoint of preventing market manipulation, purchase of own stocks by listed companies are subject to the following four restrictions under the Cabinet Office Ordinance:
(i) Volume of purchase per day. The upper limit is 25 percent of average daily trading volume during the four weeks immediately preceding the purchase.
(ii) Timing of purchase. Purchase during the 30 minutes immediately before the close of trading is prohibited.
(iii) Purchase price. The price cannot exceed that of the most recent sales.
(iv) Number of securities firms. Purchase is permitted through only one securities firm per day.
- In light of the current condition of Japan's stock markets, the restrictions regarding the upper limit on the volume of purchase per day and the timing of purchase will be temporarily relaxed until the end of this year in order to facilitate the purchase of own stocks by listed companies. To this end, a new Cabinet Office Ordinance (Cabinet Office Ordinance on Special Provisions for Cabinet Office Ordinance on Restrictions on Securities Transactions, etc.) will be enacted, which is scheduled to be promulgated and become effective on October 14, 2008.
- Details of the new Cabinet Office Ordinance are as follows:
(i) Upper limit on the volume of purchase per day
The limit will be raised from the current 25 percent to 100 percent of average daily trading volume during the four weeks immediately preceding the purchase.
(ii) Timing of purchase
Companies are currently required to purchase their own stocks during hours other than the 30 minutes immediately before the close of trading. This restriction will be lifted.
The new Cabinet Office Ordinance will take effect on October 14, 2008, and will be effective until December 31, 2008.
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