JAPAN: FSA consultation on Japan short selling proposes permanent ban on naked short selling, changes to Japan disclosure rules

Friday March 8 2013

The Japanese FSA published yesterday a consultation on Japan short selling.

Under the proposal compiled by the Financial Services Agency, the current temporary ban on naked Japan short selling would be made permanent, and would also be extended to trades on proprietary trading systems.

The FSA has also proposed to relax the uptick rule and amend obligations for information disclosure on short sales. Per the FSA proposals, the ban on short sales would be triggered only when the price of securities falls more than 10% from the closing price of the previous trading session. There is also proposed the introduction of a two-tier disclosure framework. Investors would need to disclose their positions that exceed 0.2%, instead of the current threshold of 0.25%, with publication on short positions reaching 0.5%. Changes of 0.1% would require to be reported.

The deadline for the submission of comments is 8th April. The proposed revisions on short-selling regulations are expected to be carried out in November.

Click on the above link for the consultation documents (currently only available in Japanese).