ASIC consults on short selling proposals


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.

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ASIC consults on short selling proposals

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