Japanese FSA extends temporary measures regarding restrictions on short selling and purchase of own stocks by listed companies
03 February 2010
The Japanese Financial Services Agency has extended temporary measures including the prohibition of naked short selling and the compulsory report to exchange authorities from holders of a short position of a certain level or more (0.25 % or more of outstanding issued stocks).
1. The following regulatory measures on short selling are currently in place 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 flag whether or not the transactions in question are short selling; and
3) Request the 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 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 January 31 2010:
1) Naked short selling (short selling in which stocks are not borrowed at the time of selling) is prohibited (effective since October 30 2008); and
2) Holders of a short position of a certain level or more (in principle, 0.25 percent or more of outstanding issued stocks) are required to report to exchanges through securities firms. Exchanges are required to publicly disclose such information (effective since November 7, 2008).
· 1)Upper limit on the daily purchase volume
The limit will be raised from the current 25% to 100% of average daily trading volume during the four weeks immediately preceding the repurchase.
· 2)Timing of purchase
Companies are currently required to repurchase their own stocks during hours other than the 30 minutes immediately before the close of trading. This restriction will be lifted.
3. The FSA decided to further extend these temporary measures until April 30, 2010. To this end, the Cabinet Office Ordinances and FSA Regulatory Notices necessary for these extensions will be promulgated before expiry of these measures by the end of January 2010
© FSA Japan
