Taiwan Tightens Short Selling Controls to Weather Global Market Storm

Financial Regulator Takes Preemptive Measures Amid U.S. Tariffs and Global Uncertainty

Taipei, April 6 – In response to the volatile global market conditions triggered by escalating U.S. tariffs, Taiwan's financial regulators have implemented temporary measures designed to safeguard the stability of its stock market. The Financial Supervisory Commission (FSC) announced these moves, focusing primarily on tightening regulations surrounding short selling.

The FSC noted that Taiwan's market had not yet fully reacted to the global market downturn due to a long holiday weekend. This, combined with the ongoing uncertainty surrounding the U.S. tariffs, prompted the decision to introduce temporary regulations from Monday through Friday.

The FSC opted against a complete ban on short selling, but significantly tightened controls. The limit on intraday sell orders for borrowed securities was reduced from 30% of the average trading volume over the preceding 30 business days to a mere 3%. Furthermore, the minimum margin ratio for short selling on both the Taiwan Stock Exchange (TWSE) and the Taipei Exchange (OTC market) was increased from 90% to 130%.

In a counterbalancing move, the FSC also eased restrictions on the types of collateral that could be used to cover a margin deficit, providing some flexibility for investors.

The announcement followed a Sunday morning meeting between FSC Chairman Peng Jin-lung (彭金隆), TWSE Chairman Sherman Lin (林修銘), and Premier Cho Jung-tai (卓榮泰) to assess historical market fluctuations and formulate response strategies.

The U.S. tariffs, initiated by President Donald Trump on April 2, have ignited a sharp decline in global stocks. The U.S. market alone saw over US$6 trillion wiped out, with the Dow Jones Industrial Average experiencing unprecedented consecutive drops exceeding 1,500 points.