The Tokyo Stock Exchange is poised to tighten its rules on margin trading by demanding that brokerage houses disclose whether their orders are for margin trading or not.
This approach is designed to improve the transparency of margin trading at the behest of the Financial Services Agency.
The FSA issued its entreaty to this end last Friday, in the wake of a series of scandals that were linked to short selling, which is one form of margin trading.
The exchange said it will also demand the submission of reports regarding whether margin-trading orders are newly placed or are aimed at covering long or short positions.
According to the exchange, the new disclosure rules on short selling orders will take effect along with a related legal change on Feb. 20, while the rules surrounding other margin-trading orders will be put into effect pending changes in computer systems operated by TSE market participants.
Regarding designated issues on which margin trading is actively pursued, the TSE will review its designation rules.
The exchange currently discloses the outstanding long and short margin positions of these issues every day, instead of once a week.
The TSE said it will work out the details of these measures by the end of this month.
Some investors, including hedge funds, have profited from the market's decline by short selling.
Meanwhile, Japan Securities Finance Co. has also announced a margin-trading reform package, including an increase in the maximum rate of charges to securities houses and institutional investors when they borrow shares for short selling.