ASIC seeks consultation on short selling
The Australian Securities and Investments Commission (ASIC) said it is seeking feedback on various proposals relating to both naked and covered short selling.
The public consultation coincided with the sunsetting of several related class orders, providing an opportunity to review the regulatory approach to short selling, the securities regulator said.
ASIC said it is seeking specific feedback on its proposals to:
- grant legislative relief to allow market makers of certain exchange-traded products to naked short sell units in an exchange-traded fund or a managed fund in the course of making a market in those products,
- grant legislative relief, in the context of corporate actions, to allow naked short sales of unissued products during a deferred settlement trading period,
- grant legislative relief to allow naked short sales in connection with initial public offering (IPO) sell-downs made through a special purpose vehicle (where existing shareholders of a company sell their shares through a special purpose on the condition that the company conducting the IPO is listed on the ASX).
- change the relevant time that short positions are calculated,
- remake a number of short selling class orders that are due to “sunset”.
Naked short selling is the practice of short-selling a tradable asset of any kind without first borrowing the security or ensuring that the security can be borrowed, which is conventionally done in a short sale.
“It is important that short selling continues to be regulated appropriately so that our market remains orderly and transparent,” ASIC Commissioner Cathie Armour said.
“The proposals strike a balance between providing efficiency and certainty and reducing the burden of compliance for businesses and managing the risks that short selling poses to market integrity.”
ASIC said it would invite submissions until 20 June, 2018, with a view to consolidating all short selling-related relief into a single instrument before 1 October, 2018.
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