IFSA calls for transparency on short selling

The Investment and Financial Services Association (IFSA) has called on the Government to implement a permanent covered short selling disclosure regime.

IFSA is calling for a regime in which investors and fund managers are required to report their aggregate short sale positions directly to the Australian Securities Exchange (ASX) “on a timely basis”.

IFSA deputy chief executive John O’Shaughnessy said the disclosure of all aggregate short sale positions would “promote market integrity and confidence, while also assisting the surveillance of the market”.

“Where the specific concern is market manipulation or speculation, the ASX and [the Australian Securities and Investments Commission] should have both the information and capability to investigate thoroughly and impose punitive measures where malpractice, settlement failure and/or illegal activity are identified,” O’Shaughnessy said.

He said IFSA supports the Government’s current review of short selling disclosure practices and regulatory compliance, saying short selling has “a fundamental role in maintaining an efficient capital market”.

“The Australian financial services industry and investors will benefit from a diverse market that is robust to shocks, provides liquidity and has an internationally competitive regulatory framework. IFSA is therefore supportive of enhancing the transparency of short selling and securities lending practices where there is a principles-based regulatory response promoting the integrity, efficiency and competitiveness of the Australian capital market.”

O’Shaughnessy said IFSA looks forward to “further engaging with Government, ASIC and the ASX on the permanent disclosure obligations foreshadowed in the Corporations Amendment (Short Selling) Bill and supporting regulations”.