Taiwan’s Financial Supervisory Commission (FSC) has extended its temporary short-selling restrictions for an additional week, now effective through April 18, 2025, in response to persisting global financial instability triggered by the Trump administration’s tariff moves. This comes despite recent signs of global market recovery, including a 90-day pause on U.S. tariff hikes.
🔍 Background: Why These Measures Were Introduced
The FSC introduced these curbs on April 7, 2025, shortly after U.S. President Donald Trump imposed 32% reciprocal tariffs on Taiwanese goods. These unexpected tariffs shook investor confidence, prompting Taiwan to shield its market from speculative forces and prevent excessive stock dumping.
🛡️ Key Measures in the Extended Short-Selling Restrictions
- Sell Order Cap Reduced
The limit for intraday sell orders involving borrowed securities has been slashed from 30% to 3% of the stock’s average trading volume over the past 30 sessions. - Higher Margin Requirements
The margin ratio for short selling has been increased from 90% to 130% on both the Taiwan Stock Exchange (TWSE) and the Taipei Exchange (TPEX). - Expanded Collateral Rules
The FSC now accepts a wider range of collateral to cover margin calls, offering investors more flexibility while still tightening risk exposure.
📉 Market Reaction So Far
Despite these stabilizing attempts, the Taiex index plunged by 8.31%, shedding 1,769.45 points in a single week. Even the NT$500 billion National Financial Stabilization Fund, activated on April 9, couldn’t immediately stem the losses. This highlights how deeply investor sentiment has been rattled by U.S.-led trade disruptions.
🧠 Why This Extension Matters – Our Analysis
While some might view the U.S.’s decision to pause tariffs for 90 days and apply reduced 10% duties (excluding China) as a sign of easing tensions, Taiwan remains cautious. The FSC’s strategy clearly signals that:
- Market volatility is not expected to disappear overnight.
- Taiwan is proactively defending retail investors and institutional confidence.
- The government is willing to act decisively to curb speculative trading, even if it means temporarily tightening liquidity conditions.
🌏 Regional Context: How Taiwan Compares
Taiwan isn’t alone in its defensive stance:
- China’s Central Huijin Investment has increased its stock holdings to reassure domestic investors.
- Indonesia’s central bank has stepped in to stabilize the rupiah and bond markets.
- Even Japan has taken steps to inject liquidity through policy easing.
This regional picture reflects a shared recognition: trade-related shocks demand aggressive, coordinated responses to protect national markets.
🔁 Historical Precedent
This is not Taiwan’s first time adjusting its short-selling rules:
- In 2022, the FSC restricted short selling during a market dip tied to geopolitical risks.
- In 2020, Taiwan lifted COVID-era short-selling bans once markets began recovering.
The current extension is one of the most aggressive to date, signaling the seriousness of the current global threat.
📚 FAQs
Why did the FSC cut the intraday short-selling limit to 3%?
To reduce speculative sell pressure and prevent panic selling during high volatility periods.
What is the significance of raising the margin requirement to 130%?
It makes short selling more expensive and limits aggressive trades by requiring higher capital backing.
What’s the role of the National Financial Stabilization Fund?
To inject liquidity into the market and support stocks during external shocks like pandemics or trade wars.
Will these short-selling measures last beyond April 18?
Possibly. The FSC has said it will monitor global and local conditions closely before deciding.
How do Taiwan’s measures compare to those of other Asian nations?
They align with regional trends. Countries like China and Indonesia have also taken similar steps to protect their markets.
