Taipei dealers said Taiwan Stock Exchange turnover rebounded to NT$94.2 billion by Monday’s mid-afternoon fixing as the Financial Supervisory Commission’s short-sale throttle left hedge funds scrambling for alternatives.
The session followed a 186-point gain in the Taiwan Weighted Index, with memory-chip names leading and foreign institutional investors posting a fifth consecutive net sell day worth NT$18.4 billion, according to provisional settlement data circulating on the floor.
How the throttle reshaped flow
Under rules that took effect last week, brokers must reject short orders once borrowed volume on a single stock reaches 3 percent of that issue’s average daily turnover. Desk heads said the constraint showed up fastest on high-beta electronics where securities lending was already tight after the biotechnology rout.
Two futures brokers said they saw a jump in put spreads on the Taiwan 50 tracker as funds that previously delta-hedged with borrowed shares switched to listed derivatives. Transaction taxes on options remain lower than on cash shorts, but margin requirements jumped, squeezing smaller proprietary desks.
Turnover versus volatility
Despite the headline turnover figure, the advance-decline line was nearly flat, signaling that large caps carried the index while mid-cap biotech names continued to bleed. The GreTai Securities Market’s over-the-counter index fell 0.48 percent, underscoring how the throttle steered liquidity back toward TWSE blue chips.
Dealers said stabilization-fund bids were visible on several state-bank lines but harder to spot on chipmakers after TSMC’s monthly sales release drew buyers into the close.
Regulators and the next tweak
FSC officials told lawmakers in a morning hearing that they will publish anonymized short-order rejection statistics weekly so investors can see which tickers hit the cap first. Commission Chairman Wellington Koo said the agency is not considering raising the limit before year-end unless volatility spikes again.
Several brokers asked TWSE to extend the intraday lending pool hours; the exchange said it would review the request with the Taiwan Depository and Clearing Corp. Tuesday’s opening will test whether overnight U.S. futures gains pull more foreign buy orders back into cash equities.