Taiwan FSC Lifts Ban on Short-selling Ten Days Early

Source: Regulation Asia Editors, Regulation Asia 2020-06-10

South Korea, Malaysia and Indonesia are the remaining Asian nations that still have short-selling bans in place. Malaysia’s is due to be lifted at the end of June.

Taiwan’s FSC (Financial Supervisory Commission) has announced the removal of a short-selling ban, effective Wednesday (10 June), citing a stabilisation of the local equity markets.

The short-selling ban was implemented on 20 March, after the TAIEX fell 5.83 percent to its lowest in 42 months over coronavirus fears.

The ban targeted stocks on the TWSE (Taiwan Stock Exchange) and TPEX (Taipei Exchange) that showed a decline of 3.5 percent or more a day earlier.

According to Taipei Times, the FSC had planned to end the ban next Friday (18 June), but decided to relax it earlier as both the TAIEX and TPEX have recovered to pre-Covid-19 levels.

“We banned short-selling in March in a bid to curb speculative trading amid irrational declines on the stock market, but we have not seen panic selling for a while, which is why we think it is time to let the trading mechanism return to normal,” said Securities and Futures Bureau deputy director-general Tsai Li-ling.

Last month, European securities regulators also removed short-selling bans that had been in place since mid-March.

In Asia, South Korea, Malaysia and Indonesia still have short-selling bans in place. Malaysia’s ban is due to be lifted on 30 June; South Korea’s on 15 September; and Indonesia has not yet specified a date.

Also in March, Thailand and India have tightened their rules to make short-selling more difficult. Thailand had introduced the uptick rule, while India had set caps on the size of short positions.

Industry bodies such as the WFE (World Federation of Exchanges) and ISLA (International Securities Lending Association) have been critical of short-selling bans in recent months, saying they negatively impact market quality and don’t serve to reduce volatility.

Taiwan FSC Lifts Ban on Short-selling Ten Days Early

Subscribe to Our Newsletter!

Subscribe to Our Newsletter!