The Taiwan Monthly

Dec. 2020

Trading Policies

Taiwan SBL Thrives amid the Covid-19 Pandemic

The global pandemic has been impacting capital markets and attributing to uncertainties and volatility which constitute serious threats to market confidence. Temporary short selling bans in various jurisdictions were introduced, and with no exception for Taiwan.


Global markets declined due to the pandemic in March, since when several European and Asian countries implemented short selling bans. Most of the bans were lifted after 3 months with regulators citing less turbulent market conditions.


In Taiwan, the ban came into force on March 19 after the TAIEX dropped for 7 consecutive days and plummeted 21.1 percent to 8,681.34 points, the lowest in 42 months. It is well perceived that short-selling has an important role in bringing liquidity to financial markets, increasing price efficiency and enhancing price discovery. However, to curb speculative trading amid irrational declines on the stock market, Taiwan introduced the short selling ban, softer than that in other countries. The daily short selling volume limit was reduced from 30 percent to 10 percent of the average trading volume of the underlying stock during the previous 30 business days. Given the gradual stabilization of global markets, the lift on short selling bans in most countries, strong control measures to stop the spread of Covid-19 in Taiwan, the regulator announced to ease the short selling ban, effective June 10, 2020.


The ban between March 19 and June 9 in Taiwan helped restore market confidence. This can be evidenced by TAIEX performance and a rapid growth in the Taiwan SBL business. The TAIEX recovered in May to where they were before the outbreak, continuing to surge and surpass, on July 27, the previous high of 12,682.41 points registered in February 1990, setting a new record of 13878.01 points, with total market capitalization of NT$42.28 trillion on November 23, 2020. On top of that, the SBL balances hit an all-time high on the same day, reaching NT$861.2 billion, including around 43% for short sale, 37% for financing trade and 20% for inventory. The SBL balances almost doubled compared to that on March 19, the day we launched the ban. Moreover, the total cumulative dollar amount of SBL short sale was NT$ 204.6 billion on March 19 and NT$ 345.6 billion on November 20, showing a growth of 68.9%. This illustrates that the growth of borrowing securities for selling did not create a negative impact in the fluctuation of the stock index, but significantly helped the liquidity of the stock market.


The prosperity of Taiwan SBL business is supported by timely and transparent information disclosed on the TWSE website, to which both institutional and individual investors have free and equal access. The name and number of loanable securities, SBL balances, and total cumulative dollar amount and volume of SBL short sale are available on a daily basis for investors’ reference before making investment decisions.

For further inquiries, please contact Ms. Chen at