《TAIPEI TIMES》Regulator announces ban on short-selling

STOCK STABILITY: The ban, which applies to all stocks on the TWSE and TPEX, restricts short-selling of 152 stocks starting on Monday, the FSC said yesterday

By Kao Shih-ching / Staff reporter

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The Financial Supervisory Commission （FSC） yesterday announced a tightening of its short-selling ban on local stocks that fall 3.5 percent or more from the previous trading day, in the market regulator’s latest efforts to stabilize the local stock market.

The TAIEX saw a third straight losing session yesterday, down 0.98 percent to close at 12,819.2 points. The new measure takes effect on Monday, the commission said.

The ban would apply to all stocks listed on the Taiwan Stock Exchange （TWSE） and the Taipei Exchange （TPEX）, the FSC said.

A total of 105 TWSE-listed stocks and 47 TPEX-listed stocks saw share prices drop by 3.5 percent or more in Taipei trading yesterday, with Apple Inc camera lens supplier Largan Precision Co’s （大立光） share price dropping 4.43 percent to NT$1,725. Investors would be restricted from short-selling those 152 stocks on Monday, the commission said.

The commission would make a list of stocks that the short-selling ban applies to, and would update it on a daily basis, the commission said.

Short-selling is when investors borrow securities from a broker and then sell them, as they expect the price of the stocks to fall.

Investors make a profit by buying them back later at a lower price.

Local stocks have plummeted 29.63 percent since the beginning of this year, taking a hit from central banks’ rate hikes, Russia’s invasion of Ukraine and growing economic recession risks.

The monthly turnover was also on the ebb, down 20 percent from NT$5.26 trillion （US$163.4 billion） in January to NT$4.2 trillion last month, TWSE data showed.

The FSC yesterday did not say how long the short-selling ban would last.

Last time the commission implemented a similar short-selling ban was in March 2020, and it lasted for three months in an effort to stabilize local stock markets during the COVID-19 pandemic.

At the beginning of this month, the FSC began tightening its regulations on short-selling by lowering the maximum number of securities that could be borrowed and by increasing the margin requirement.

However, the commission had said that it would not implement a short-selling ban as the TAIEX’s fall this year had not been as steep as in 2020.

新聞來源：TAIPEI TIMES