2013 Reform of Short Selling Regulations in Japan


On November 5, 2013, the amendments to the laws and regulations related to the Financial Instruments and Exchange Law of Japan (the “FIEL”) went into effect, in which regulations concerning short selling in the Japanese marketplace (“Short Selling”) were modified (the “Short Selling Reform”). Short Selling has been subject to an extra layer of regulation, especially after the global financial crisis following the turmoil in the subprime market, due to a concern that such a technique can cause stock prices to plunge further in an already sharply falling market. As the economy recovers from the crisis, the Japanese government has effectively declared that it is now time to get short selling regulations back on a normal track.


As covered in news reports, Short Selling has not been issue-free. In Japan, there were multiple cases where Short Selling was said to be conducted as insider trading prior to announcements of large-scale capital raising through public offerings. The Short Selling was also said to be distorting the appropriate price fixing function in public offerings, because there seemed to be excessive price drops after the announcement of public offerings due to Short Selling activities.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP | Attorney Advertising

Written by:


Morrison & Foerster LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.