The Financial Services Agency on Wednesday ordered five securities houses to improve their business practices regarding short selling.
The securities companies are Merrill Lynch Japan Securities Co., the Tokyo branch of KBC Financial Products UK Ltd., Okasan Securities Co., Credit Suisse First Boston Securities (Japan) Ltd. and Nippon Global Securities Co.
Short selling involves transactions in which shares are borrowed from a brokerage house or institutional investor and then sold with the hope they can be bought back less expensively at a later date. This way, the stock can be returned to the lender and the borrower can pocket the difference.