JAPAN: FSA Extends Temporary Measures on Short Selling

Monday April 23 2012

Further to the update published on October 25, 2011, the Japanese FSA has decided to further extend its temporary measures on short selling until October 31, 2012. To this end, the Cabinet Office Ordinances and FSA Regulatory Notices necessary for these extensions will be promulgated before expiry of these measures by the end of April, 2012.

The Financial Services Agency (FSA) has put in force the following regulatory measures on short selling, as temporary measures effective until April 30, 2012:

a) Naked short selling (short selling in which stocks are not borrowed at the time of selling) is prohibited (effective since October 30, 2008); and

b) Holders of a short position of a certain level or more (in principle, 0.25 per cent or more of outstanding issued stocks) are required to report to exchanges through securities firms. Exchanges are required to publicly disclose such information (effective since November 7, 2008).

Regarding the purchase of own stocks by listed companies, taking into consideration the current situation of Japan’s capital markets, the upper limit on the daily purchase volume will be raised from the current 25% to 100% of average daily trading volume during the four weeks immediately preceding the repurchase. Furthermore, companies who are currently required to repurchase their own stocks during hours other than the 30 minutes immediately before the close of trading, will no longer have to so.

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