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Taiwan’s financial authorities reinforced short-selling restrictions on Friday, following on the back of similar action in the Taiwanese market taken on 3 October.
According to new rules applied by Taiwan’s Financial Supervisory Commission (FSC), restrictions will apply to short sales of an equity security if its share price has fallen by 3.5 per cent or more from its closing price from the previous trading session.
In these circumstances, investors will be prohibited from using the previous closing price, or a lower price, to short the stock through borrowing securities, according to a statement released by the FSC through Taiwan’s Central News Agency (CNA).
However, securities houses and futures traders will be exempt from these restrictions if they are conducting short selling activities for hedging purposes, according to the FSC.
The FSC’s Securities and Futures Bureau reported that share prices for 105 stocks on the Taiwan Stock Exchange’s main board, and 47 stocks traded through the OTC market, fell by 3.5 per cent or more on Friday 21 October.
Consequently, these equities have been covered by the new short-selling rules when Taiwan’s markets reopened this morning.
