Japan is set to introduce a long-expected ban on the shorting of stocks immediately before new issuances. The rules, which are expected to mirror Regulation M in the US, will prevent investors that are shorting a stock from subscribing to a new issue from the company involved. The move is intended to prevent investors shorting a new issuance that is expected to be dilutative, see the price of the stock fall when the new shares are issued and then fill their short positions with the new shares before exiting the trade at a profit.
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