Taiwan’s financial regulators are preparing to tighten short-selling rules effective Monday, November 9, 2026, following a sharp sell-off that produced the Taiex index’s steepest weekly decline in roughly a quarter-century.
The measures respond to a rapid deterioration in investor sentiment driven largely by weakness in artificial intelligence and semiconductor shares, heavy foreign outflows, and concerns linked to the outcome of the recent U.S. midterm elections.
The benchmark Taiex closed Friday at 39,701.64, down 1,873 points or 4.51 percent for the session—the fourth-largest single-day point loss on record.
Earlier in the day the index had plunged by as many as 3,737 points, an intraday record, before recovering part of the loss.
For the full week the gauge shed 12.19 percent.
From its early-October intraday high near 49,969, the index has now retreated more than 20 percent, placing it in bear-market territory.
TSMC, which accounts for a substantial share of the market’s capitalization, led the decline in line with a broader global semiconductor rout.
Officials and analysts attributed the pressure to a combination of factors.
Foreign institutional investors recorded their largest monthly net sale of Taiwanese equities on record in October and continued selling in early November.
The sell-off also tracked steep losses in the Philadelphia Semiconductor Index and reflected worries that political shifts in the United States could slow or restrict the expansion of AI data centers.
These developments compounded existing caution about the returns on massive AI infrastructure spending.
In a statement issued Friday, Taiwan’s Financial Supervisory Commission announced several steps to preserve orderly trading. Beginning November 9, the daily limit on intraday short-sale orders that use borrowed securities will be cut from 30 percent to 3 percent of a stock’s average daily trading volume over the preceding 30 business days.
Certain hedging and market-making activity by securities firms is exempted.
At the same time, the minimum margin requirement for short sales of listed and over-the-counter securities will rise from 90 percent to 130 percent.
Investors will also be permitted, with the consent of their securities-finance company or broker, to post a wider range of liquid collateral—including certain foreign securities—to meet margin obligations.
The commission further encouraged listed companies to consider share buybacks and to hold investor briefings that clarify operating conditions and outlooks.
It said it will continue to monitor global and domestic conditions and may adjust the measures as appropriate, while urging investors to act rationally.
Separately, the management committee of the National Financial Stabilization Fund authorized its executive secretary to deploy resources as needed to dampen volatility.
The fund, established in 2000 with a capacity of NT$500 billion (approximately US$15 billion), has been used for market support on nine prior occasions.
Officials noted Taiwan’s sound economic fundamentals and the high correlation between the local market and the Philadelphia Semiconductor Index, while citing the elevated uncertainty in the global political and economic environment.
Taiwan has resorted to temporary short-selling restrictions during earlier periods of market stress, including episodes in 2008, 2015, 2020, and 2025.
It now remains to be seen whether or not the latest combination of tighter borrowing limits, higher margin requirements, and potential fund intervention will quickly stabilize prices. Notably, past experience shows mixed results depending on the broader macroeconomic backdrop. For now, the authorities have signaled their readiness to act in the face of the most severe weekly setback since 2001.
