The Taiwan Monthly

Trading Policies

Rapid growth in Taiwan SBL and short sale

Due to market fluctuation caused by the pandemic, temporary short selling bans in various jurisdictions were introduced, and this was no exception for Taiwan. The FSC temporarily reduced the daily short selling ceiling for less than three months and lifted the restriction on June 10, 2020.

 

SBL balances and short sale balances have been expanding over the last two years. The SBL balances hit an all-time high on December 2, 2021, reaching NT$1.22 trillion, which increased by 76% compared to that on June 10, 2020, the day the ban was lifted. Moreover, the total cumulative dollar amount of SBL short sale set a new record of NT$ 641.9 billion on May 31, 2022, showing a growth of 103.2% compared to that on June 10, 2020, while TAIEX surged by 43.4% during this period. This illustrates that borrowed securities for short selling did not actualize a negative stock index impact, but significantly helped the stock market liquidity.

 

Recent uncertainties, such as the Russia-Ukraine war, US interest rate hikes and inflation worries, caused global stock market volatility. Some markets have launched contingency plans to cope with the market turmoil. TAIEX has slumped 19% since the beginning of 2022. However, short sale turnover accounted for only 2.69% of Taiwan’s turnover for the first half of 2022, which should not be scapegoated for the market descent. Our regulators and market operators will closely evaluate market trends and execute measures to harmonize market equilibrium if necessary.

 

For further inquiries, please contact Ms. Chen at 0778@twse.com.tw