Taiwan's FSC Acts to Shield Market from Global Trade Tensions

Financial Watchdog Implements Temporary Measures to Stabilize Stock Market Amidst US Tariff Concerns

The Financial Supervisory Commission (FSC) in Taiwan has announced a series of temporary measures to bolster the stability of the stock market, aiming to protect the interests of Taiwanese investors and listed companies. These actions come in response to potential market volatility stemming from US President Donald Trump's "reciprocal" tariffs announced recently.

The FSC's proactive approach involves temporary restrictions on short selling and other interventions designed to mitigate potential fluctuations. These measures are effective immediately and will remain in place through the end of the week.

Short selling, a practice where investors borrow and sell securities anticipating a price decline, is a key area of focus. The FSC is implementing measures to curb the scale of this activity to help prevent significant market downturns.

To address potential market impacts following an extended holiday weekend, the commission is limiting the volume of shares available for short selling.

Specifically, the volume of intraday securities lending for short selling will be reduced to 3% of a stock's average daily trading volume over the previous 30 sessions, a significant decrease from the previous 30%. Furthermore, the required deposit for borrowing securities will increase to 130% of a stock's value, up from 90%, effectively increasing the cost associated with short selling.

The FSC will also allow investors to use municipal means as collateral. This allows investors to make up for margin shortfalls in margin trading or short selling, provided these municipal means have adequate market liquidity and can be assessed objectively and reasonably.

The commission emphasized its ongoing commitment to closely monitor both international financial developments and domestic capital market conditions, with the flexibility to adjust measures as required.