The Taiwan Stock Exchange will further relax its short-selling restrictions from yesterday to boost the nation's chances of being upgraded to developed-market status in the FTSE Group's global stock benchmarks.
The exchange is abolishing a requirement that security borrowing transactions must be in connection with a "strategic purpose," as well as the on-shore collateral requirement imposed in cases when the borrower and the lender are foreign investors, the exchange said in a statement on its Web site.
Taiwan, Asia's fifth-largest market by value, in September 1998 imposed a ban on selling borrowed shares at a price lower than the previous day's close to prevent speculative trading from damping the market. During the past year, the exchange has eased some of those restrictions to reflect the growing popularity of stock lending, exchange chairman Wu Nai-jen (吳乃仁) said in a statement during a recent overseas trip.
In December, Wu said the bourse would ease restrictions in the first half of this year, in time for FTSE's country classification review in September.
An upgrade would mean Taiwan's stocks would be added to the seven FTSE indexes designated for developed markets, including the FTSE All-World Developed Index, and prompt index-tracking funds to allocate money to buy Taiwanese shares. About US$2.5 trillion in funds are globally benchmarked against the FTSE's indexes.