Taiwan raises cost of shorting stocks to help stabilise market

Taiwan raises cost of shorting stocks to help stabilise market
FILE PHOTO: The logo of Financial Supervisory Commission is seen in its office in Taipei, Taiwan May 23, 2016. REUTERS/Tyrone Siu/File Photo

TAIPEI : Taiwan’s financial regulator tightened trading rules on Friday to raise the cost of shorting a stock, as authorities try to stabilise financial markets amid rising global interest rates and asset price volatility.

Taiwan’s benchmark index is down more than 26 per cent so far this year, on fears over global inflation and slowing growth as well as soaring U.S. interest rates. It closed down 0.8 per cent on Friday.

The Financial Supervisory Commission said that from Saturday it will raise the minimum securities financing deposit for listed stocks from 90 per cent to 100 per cent.

It will also cut the number of intraday borrowing and selling commissions from 30 per cent to 20 per cent of the average daily business transaction volume over the prior 30 working days.

Tony Huang, vice president at Taishin Securities Investment Advisory Co, said the measures will “help suppress short-selling flames”, while the reduction of selling pressure will help stabilise the market.

The regulator said that it will continue to pay close attention to the domestic and foreign financial situation and stock market trends, and calibrate its response in a careful and timely manner.


Source: Reuters