On October 27, 2008, the Financial Services Agency (FSA) announced that it will implement the following measures, which will be effective temporarily until the end of FY2008. The FSA will also immediately develop and/or amend any related government ordinances, etc.
- Prohibition of any short selling which is not backed by actual stock at the time of the sale (hereinafter "Naked Short Selling")
- Requirement that any person holding a certain amount of short selling positions (0.25% of the total number of issued shares) report this and related information to the exchanges through securities companies. The exchanges will publish said information.
Furthermore, in Japan, short selling regulations that apply to all listed securities have already been implemented. Specifically, laws and regulations require clarification and confirmation as to whether or not a transaction is short selling, and, as a general rule, short selling is prohibited at prices that are equal to or lower than the most recent prices published by exchanges.
Moreover, the FSA requested that up until the time the above-mentioned laws and regulations are developed and/or amended, as an emergency response effort exchanges take voluntary measures against Naked Short Selling.
The Tokyo Stock Exchange (TSE) also has serious concerns about short selling transactions which potentially fail to deliver securities, and it will strictly monitor any unfair trading through this type of short selling. The TSE is strongly appealing to all trading participants to recognize the intentions of the above measures and refrain from accepting Naked Short Selling orders even before legislative measures are implemented.
Atsushi Saito
President & CEO
Tokyo Stock Exchange Group, Inc.