Cap on Securities Lending Sell Orders Lowered to 3%, Securities Firms Hedging Excluded
Affected by international political and economic conditions, Taiwan stocks have recently shown significant volatility. The National Financial Stabilization Fund has launched market support operations, and the Financial Supervisory Commission has simultaneously announced stabilization measures. Starting from 11月9日, intraday securities lending sell order volume will be reduced and the margin requirement ratio for short sales will be raised, while diversified collateral for margin calls will be allowed, in order to maintain order and stability in the securities market.
The Financial Supervisory Commission announced that daily intraday securities lending sell orders, previously capped at no more than 30% of the average daily trading volume of the security over the prior 前30個營業日, will be lowered to 3%, equivalent to a tightening of 九成. Securities lending sell orders by securities firms for hedging needs related to the issuance of put warrants, index investment certificates, structured products and equity derivative transactions operated at business premises, serving as liquidity providers for beneficiary certificates, or futures proprietary traders acting as market makers for stock options or stock futures, as well as securities lending sell orders by securities firms acting as stock market makers to provide buy and sell quotes or for hedging needs, are not subject to the restriction.
Short-Sale Margin Raised to 130%, Diversified Collateral Allowed
The second measure raises the minimum margin requirement for listed and OTC securities short sales from 90% to 130%, increasing the cost of shorting. By calculation, an investor who originally needed to prepare 90萬元 in margin will need to prepare 130萬元 after the new system takes effect, an increase of 40萬元, the highest ratio ever for Taiwan stocks. The third measure provides that, with the consent of the securities finance enterprise or securities firm, in addition to odd lots of listed stocks and emerging stocks already included in the eligible collateral scope as of 115年3月30日, investors may use other diversified collateral that has market liquidity and can be objectively and reasonably valued, such as foreign securities held through sub-brokerage, to make up for shortfalls in financing down payments or short-sale margins and avoid forced liquidation due to margin calls.
In addition, electronic filing is now in place for buybacks of treasury shares by listed and OTC companies. The Financial Supervisory Commission encourages companies to assess the implementation of share buybacks in a timely manner based on their own funding arrangements, financial conditions and buyback purposes, and encourages them to hold investor conferences or participate in themed results presentations in a timely manner to proactively explain their operating conditions, financial performance, industry outlook and future development strategies. This is not the first time the Financial Supervisory Commission has implemented short-selling curbs; it implemented the same three stabilization measures in 去年4月. The Financial Supervisory Commission stated that it will continue to monitor international financial conditions and domestic capital market conditions, adjust measures in a timely manner, and advised investors to invest prudently and respond rationally.