Taipei: Taiwan's top financial regulator has announced temporary stock market measures, including tightened limits on short selling, in a bid to maintain stability amid chaos on world markets driven by sweeping U.S. tariffs.
According to Focus Taiwan, the Financial Supervisory Commission (FSC) stated that Taiwan's stock market has not yet reacted to the U.S. tariffs and the global response due to a long holiday weekend that began on Thursday. In light of this delay, coupled with ongoing uncertainty in global markets regarding the tariffs, the FSC has decided to implement temporary regulations from Monday through Friday to ensure the stability of the stock market and the protection of investors' interests.
The FSC has opted not to ban short selling outright but will reduce the limit of intraday sell orders for borrowed securities from 30 percent of the average trading volume of the stock over the previous 30 business days to just 3 percent. Additionally, the minimum margin ratio for short selling on the Taiwan Stock Exchange (TWSE) or the Taipei Exchange, which operates the local OTC market, will be increased from 90 percent to 130 percent.
Moreover, the FSC announced it would relax the limits on the types of collateral that can be used to cover a margin deficit. This decision follows a meeting between FSC Chairman Peng Jin-lung, TWSE Chairman Sherman Lin, and Premier Cho Jung-tai on Sunday morning, where they analyzed past significant drops in the stock market and discussed potential response measures.
The regulatory action comes after U.S. President Donald Trump imposed tariffs on over 180 countries on April 2, leading to a sharp decline in global stocks. In the U.S., more than US$6 trillion was wiped from markets due to the plunge, with the Dow Jones Industrial Average falling by more than 1,500 points two consecutive days for the first time in history.