Published On: Fri, Jan 22nd, 2010

Japan FSA Extends Temporary Measures Regarding Restrictions On Short Selling

1.The following regulatory measures on short selling are currently in place, with regard to all listed stocks in Japan:

1) An “uptick rule requirement” which prohibits, in principle, short selling at prices no higher than the latest market price;

2) Requirements for traders to verify and flag whether or not the transactions in question are short selling; and

3) Request the exchanges to make daily announcements on their aggregate price of short selling regarding all securities and aggregate price of short selling by sector (The announcements have been made sequentially since October 14, 2008).

In addition, the Financial Services Agency (FSA) has put in force the following measures, as temporary measures effective until January 31, 2010:

1) Naked short selling (short selling in which stocks are not borrowed at the time of selling) is prohibited (effective since October 30, 2008); and

2) Holders of a short position of a certain level or more (in principle, 0.25 percent or more of outstanding issued stocks) are required to report to exchanges through securities firms. Exchanges are required to publicly disclose such information (effective since November 7, 2008).

2. Regarding the purchase of own stocks by listed companies, taking into consideration the of situation Japan’s capital markets, the following restrictions have been temporarily relaxed over the period from October 14, 2008, to January 31, 2010.

1)Upper limit on the daily purchase volume – The limit will be raised from the current 25% to 100% of average daily trading volume during the four weeks immediately preceding the repurchase.

2)Timing of purchase – Companies are currently required to repurchase their own stocks during hours other than the 30 minutes immediately before the close of trading. This restriction will be lifted.

3. The FSA decided to further extend these temporary measures until April 30, 2010. To this end, the Cabinet Office Ordinances and FSA Regulatory Notices necessary for these extensions will be promulgated before expiry of these measures by the end of January, 2010.

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