Taiwan’s top financial regulator tightened short-selling rules for the third time in three weeks. Under the Financial Supervisory Commission’s (FSC) new rules, if a stock closes lower by 3.5% or more in the previous session, investors are prohibited from using the previous closing price or a lower price to short the stock through borrowing securities.
However, securities houses and futures traders that conduct short selling for hedging purposes will be exempt from the newly imposed ban, the FSC said.
In addition, the rules bar investors from using the previous closing price or a lower price to conduct day trading if a stock ends lower by 3.5% or more in the previous session.
According to statistics compiled by the FSC’s Securities and Futures Bureau, 105 stocks on the main board and 47 stocks on the over-the-counter market fell 3.5 percent or more on October 21, when the rule change was announced.