March 27, 2009
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 already in place as permanent measures, 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; and

    • 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 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 March 31, 2009 (See the FSA press release on October 27, 2008.):

    • 4) Naked short selling (short selling in which stocks are not borrowed at the time of selling) is prohibited (effective since October 30, 2008); and

    • 5) 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 (effective since November 7, 2008).

  2. Regarding the purchase of own stocks by listed companies, the following restrictions have been temporarily relaxed over the period from October 14, 2008, to March 31, 2009. (See the FSA press release on October 13, 2008.)
    • 1) Upper limit on the volume of purchase per day

      (Main provision)

      25 percent of the average daily trading volume during the four weeks immediately preceding the purchase

      →100 percent

    • 2) Timing of purchase

      (Main provision)

      Companies are currently required to purchase their own stocks during hours other than the 30 minutes immediately before the close of trading.

      →This restriction has been lifted.

  3. On March 24, 2009, the FSA decided to extend these temporary measures until July 31, 2009. To this end, the Cabinet Office Ordinances and FSA Regulatory Notices necessary for these extensions will be promulgated before expiry of these measures on March 31, 2009.


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