The Financial Services Agency said Monday it will extend its ban on a type of stock short selling, currently set to end July 31, until the end of October to help stabilize stock markets.
It will be the sixth extension of the restrictions, which were introduced on transactions known as naked short selling in October 2008 amid stock plunges stemming from the financial crisis.
Short selling is believed to be one factor behind the market tumble. In such trading, a large volume of shares are borrowed and sold in the hope that the shares can be purchased later at a lower price. Naked short selling refers to transactions in which traders sell stocks without borrowing them first. Under the restrictions, short sellers with a certain position or more are required to report their transactions to bourses.