JAPAN: Guidelines Concerning Measure to Raise the Customer Margin Ratio

Tuesday December 13 2016

Tokyo Stock Exchange (TSE) shall implement the below measure to raise the customer margin ratio for an issue, based on the following guidelines when the Exchange deems that there is excessive margin trading in the issue.

Criteria for implementation of primary measure

If an issue subject to daily publication falls under any of the criteria specified below, the Exchange shall implement the measure to raise the customer margin ratio, for new margin sales and purchases on and after the next business day when the Exchange confirms that the stock falls under the criteria.

Criteria for outstanding margin trades

In the case of falling under any of the following:

• The ratio of outstanding sales to listed shares is 15% or more, and ratio of outstanding sales to outstanding purchases is 70% or more ;
• The ratio of outstanding purchases to listed shares is 30% or more, and the difference in the price of the stock and its 25-day moving average is 30% or more for 3 consecutive business days (limited to cases where the price of the stock is above its 25-day moving average on each business day); or
• When the Exchange publicises an “Issue for which outstanding margin trading is continuously increasing,” on or after the corresponding day of the following month, the ratio of outstanding sales to listed shares is 15% or more, or the ratio of outstanding purchases to listed shares is 30% or more.

Criteria for margin trading ratio

Where the difference in the price of the stock and its 25-day moving average is 30% or more for 3 consecutive business days, and falling under any of the following (limited to cases where the trading volume on each business day is 1,000 trading units or more):

• The ratio of new margin sales is 20% or more for 3 consecutive business days (limited to cases where the price of the stock is below its 25-day moving average on each business day)
• The ratio of new margin purchases is 40% or more for 3 consecutive business days (limited to cases where the price of the stock is above its 25-day moving average on each business day)

Criteria for turnover ratio

In the case where the difference in the price of the stock and its 25-day moving average is 40% or more on any given business day, and falling under any of the following:

• The trading volume on the business day is equal to or more than the number of listed shares, and the ratio of new margin sales on the business day is 30% or more (limited to cases where the price of the stock is below its 25-day moving average on the business day) ; or
• The trading volume on the business day is equal to or more than the number of listed shares, and the ratio of new margin purchases on the business day is 60% or more (limited to cases where the price of the stock is above its 25-day moving average on the business day).

Exception

For cases that do not fall under any of the criteria above, where the Exchange deems that measures are necessary in consideration of the margin trading conditions and the nature of the stock.

Click on the link above for further details.