ASIC releases short selling guidance
The Australian Securities and Investments Commission (ASIC) has released regulatory guidance to assist with compliance with new legal requirements related to short selling.
The revised version of Regulatory Guide 196 (RG 196) clarifies the legal position about which short sales are permitted, along with specific reporting and disclosure obligations. This follows a temporary ban on short selling imposed by ASIC in September 2008. Regulatory Guide 196 Short selling: Overview of s1020B was first published in September 2008, and the Government introduced new legislation to regulate the use of short selling in Australia in December 2008 and December 2009. The requirements include a ban on naked short selling and the imposition of specific reporting obligations in relation to covered short sales.
RG 196 contains an overview of short selling concepts and new provisions in the Corporations Act as a result of the changes to the legislation regarding short selling, as well as some relief that ASIC has granted in relation to several of the provisions, according to ASIC.
The guidelines outline the reporting of short sale transactions and of short positions, as well as an exemption from reporting short positions below a certain threshold.
RG 196 also clarifies ASIC’s policy for granting relief to allow naked short selling in some circumstances. ASIC has reviewed the exemptions over time in regards to liquidity in the market.
ASIC also said it encourages short sellers and system developers to continue to monitor ASIC Information Sheet 98 Short selling: Short position reporting (INFO 98), which includes key tasks and practical information they must be aware of prior to the starting date of the new reporting requirements.
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