The Financial Supervisory Commission (FSC) yesterday announced temporary response measures to help maintain stock market stability, while safeguarding the interests of Taiwanese investors and listed companies.
In the face of potential market turmoil from US President Donald Trump’s “reciprocal” tariffs announced last week, the commission said it would impose temporary curbs on short selling shares and other measures to reduce potential volatility.
The new measures take effect today and last through Friday, the FSC said in a statement.
Photo: CNA
Short selling is when investors borrow securities, typically from brokerages, and sell them, expecting the price to fall so they can make a profit by buying them back at a lower price later.
Expecting Trump’s tariffs to create shocks in the local stock market following an extended holiday weekend, the commission said it would limit the number of shares that can be sold short, the statement said.
Starting today, the volume of intraday securities lending to short sell a stock is to be lowered to 3 percent of the stock’s average daily trading volume over the previous 30 sessions, down from 30 percent, the commission said.
In addition, the amount of money an investor must deposit to borrow securities is to be raised to 130 percent of a stock’s value from 90 percent, it said, underlying the commission’s intention to effectively increase the cost of short selling.
The FSC would also allow investors to use municipal means as collateral, as long as they have market liquidity and can be objectively and reasonably assessed, allowing investors to make up the margin shortfall in margin trading or short selling, it added.
The commission said it would continue to monitor changes in the international financial situation and domestic capital market conditions, and adjust measures in a timely manner.
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