The Australian Securities and Investments Commission (ASIC) has offered relief from the covered short-selling ban to investors who hold convertible securities to hedge their exposure to an underlying share.
Investors holding convertible securities, such as convertible bonds, wishing to hedge their exposure to the underlying share will now be granted exemption from the covered short-selling ban.
ASIC said this change will allow investors to short sell to hedge exposure through a fixed conversion price or ratio convertible security.
“The current relief is limited to convertible securities where the number of shares issued on conversion is referable to the volume weighted average price (VWAP) of the share over a period,” the ASIC statement said.
“There is a similar commercial need to hedge exposure as a result of holding a security that converts at a fixed price or ratio and a security that converts by reference to VWAP,” the regulator said.
The short selling relief will facilitate fundraising by companies.
