FSC bans short selling to curb losses
Date:2020-03-19
Due to the impact of the coronavirus which causes fluctuations in the securities market, Financial Supervisory Commission (FSC) announces the following measures to take effect to protect investor’s rights and avoid stock prices slump resulting from short-selling transactions 1. For Investors selling short or borrowing securities (from the TWSE lending system, securities dealers, or securities financial institutions) to sell listed stocks and Taiwan Depository Receipts, If the closing price falls by more than 3.5% on the following day, investors are prohibited to sell securities at a price lower than the closing price of the previous trading day. However, if the closing price of the next trading day still falls by more than 3.5%, the short-sales-bans are still in effect. Nevertheless, securities dealers and futures dealers are not restricted to sell/ borrow securities due to the need for hedging. 2. Investors are prohibited to engage in day-trading when the price is lower than the previous trading day and short-selling day. If the reversing transaction hasn’t completed after the sale of the current securities and its selling price is lower than the previous trading day, it is not allowed to change the type of transaction as margin sale or short sale. The FSC did not say how long the short-selling ban would last. They will assess and respond to COVID-19 pandemic situation in due course. Reference: Financial Supervisory Commission (FSC)
Back