Japan’s Financial Services Authority (FSA) has brought forward its short-selling ban to start today, due to sinking stock market performance.
A temporary ban on naked short-selling was due to run from 4 November until 31 March 2009, but was brought forward to today (28 October) after Japan’s Nikkei 225 index fell to 7,162.90 points, its lowest level for 26 years. The index has lost more than half its value since the beginning of the year, which was at 14691.41 on 4 January 2008; a dive that has been attributed in part to short-selling and market manipulation.
The ban will also require investors to disclose any short-sale positions of more than 0.25% of the outstanding shares in specific stocks.
The FSA has asked exchanges to be vigilant and look for possible naked short sale transactions while it develops and amends the temporary ban.
“The Tokyo Stock Exchange (TSE) 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,” said Atsushi Saito, president and CEO of the TSE, in a statement. “The TSE is strongly appealing to all trading participants to recognise the intentions of the above measures and refrain from accepting naked short selling orders even before legislative measures are implemented.”