Taiwan regulators warn insurers of short selling risk
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Taiwan regulators warn insurers of short selling risk 26 November 2011Taipei Reporter: Anna Reitman
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Taiwan’s regulators urged insurers to stop lending securities to short sellers, seeking to bolster equities after heavy losses on markets, according to Businessweek (BW).
Although denying media reports of securities lending bans, officials have called insurance companies to remind them that lending stock for short sales may result in the reduction of value of their own stocks, a spokeswoman at the Financial Supervisory Commission (FSC) told BW.
The FSC is trying to stop investors from profiting from declines in markets at a time when surging borrowing costs in the euro region are stoking concern the region’s debt crisis will derail global economic growth.
Earlier, Reuters reported that the FSC has introduced a measure whereby only 20 per cent of a stock's average trading volume in the past 30 sessions could be used for short-selling. Previously, up to three per cent of a company's total outstanding shares could be used.
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