Australia regulator ASIC announced that it is seeking feedback on various proposals relating to both naked and covered short selling.
ASIC’s public consultation coincides with the sunsetting of a number of related class orders, providing an opportunity to review our regulatory approach to short selling.
- 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) selldowns 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’.
Following consultation, ASIC aims to consolidate all short selling-related relief into a single instrument.
Cathie Armour
ASIC Commissioner Cathie Armour said:
It is important that short selling continues to be regulated appropriately so that our market remains orderly and transparent. 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.
The paper covers a broad range of proposals.
ASIC invites submissions on CP 299 by 20 June 2018, with a view to issuing a final consolidated instrument before 1 October 2018.
The complete announcement can be seen here.