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To: Bucky Katt who wrote (8933)8/7/2002 7:49:55 AM
From: paret   of 48461
 


Tokyo unveils new curbs on short-selling

Straits Times
08/07/2002 straitstimes.asia1.com.sg

Financial regulator takes action to rein in wild price swings in the hope of restoring stability to the ailing bourse

TOKYO - Japan yesterday sought to restore stability to the flagging share market by announcing new restrictions on short-selling, a practice blamed for wild share price fluctuations.

Short-sellers sell shares they do not yet own in the hope of buying them back when the price drops, thus making a profit.

Short-selling can accelerate falls in a declining stock market.

With effect from September, the rules announced by the Financial Services Agency (FSA), Japan's top financial regulator, will apply to short-selling by brokerages which finance such trades through three special companies that lend stocks and money to fund margin transactions.

At the moment, trades that go through the firms in Tokyo, Osaka and Nagoya are exempt from tightened rules adopted in March.

In March, the FSA disallowed short-selling at or below a stock's last transacted price when the stock is falling to prevent bearish brokers from driving down its value.

The latest measures also included the easing of regulations to allow banks and securities firms to share branches to promote the sale of stocks.

To facilitate the market entry of new securities companies and fund management firms, the FSA said that it will consider reducing minimum capital requirements, now at 100 million yen (S$1.5 million).

Tokyo's benchmark Nikkei Stock Average is hovering near its lowest levels since the bursting of a speculative asset bubble in the early 1990s set off the economy's current malaise.

The FSA said the new measures were simply to bring short-selling rules in line with global standards.

It also pledged to strengthen auditing practices. It wants to increase the number of certified practising accountants and the quality of their services, while developing a standard for the accounting of stock options. --Reuters, AFP
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