Tuesday, January 25, 2011

Japan FSA Extends Restrictions on Short Selling Until End of April

The Japanese Financial Services Agency has extended its restrictions on short selling until April 30, 2011. The restrictions were to have expired on January 31, 2011. Thus, the regulatory measures on short selling currently in place will continue with regard to all listed stocks in Japan. In Japan, the short position reporting requirements cover only equity stock short positions.

There is an uptick rule requirement prohibiting, in principle, short selling at prices no higher than the latest market price. There are also requirements for traders to verify and flag whether or not the transactions in question are short selling and 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 FSA has also prohibited naked short selling.

Moreover, 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.