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Australian regulator releases guidance on new short selling legal requirements

Posted 27 April 2010 - 10:31am by Craig McGlashan

The Australian Securities and Investments Commission (ASIC) has issued guidance to help investors comply with new short selling legal requirements.

Areas covered include which types of short sales are permitted, as well as reporting and disclosure obligations. The ASIC highlighted two particularly important types of reporting obligations, namely of short sale transactions and positions, and also warned investors to be aware of an exemption from reporting below a certain threshold.

The guidance is in response to new legislation in Australia which was brought into effect by the Corporations Amendment (Short selling) Act 2008 and the Corporations Amendment Regulations 2009 (No. 8).

The ASIC had temporarily banned short selling in September 2008, lifting the ban on non-financials in November that year, with the ban on financials removed in May 2009. However, the new legislation means that on 1st June 2010 short sellers will be required to report short positions to the ASIC, and on 21st June the ASIC will begin publishing aggregated data on its website.

The advice is contained within Regulatory Guide Short Selling 196 (available here), first published in September 2008. The ASIC also advised industry participants to monitor ASIC Information Sheet 98: Short selling: Short position reporting (available here), which provides further information.

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The Australian Securities and Investments Commission (ASIC) has issued guidance to help investors comply with new short selling legal requirements.

Areas covered include which types of short sales are permitted, as well as reporting and disclosure obligations. The ASIC highlighted two particularly important types of reporting obligations, namely of short sale transactions and positions, and also warned investors to be aware of an exemption from reporting below a certain threshold.

The guidance is in response to new legislation in Australia which was brought into effect by the Corporations Amendment (Short selling) Act 2008 and the Corporations Amendment Regulations 2009 (No. 8).

The ASIC had temporarily banned short selling in September 2008, lifting the ban on non-financials in November that year, with the ban on financials removed in May 2009. However, the new legislation means that on 1st June 2010 short sellers will be required to report short positions to the ASIC, and on 21st June the ASIC will begin publishing aggregated data on its website.

The advice is contained within Regulatory Guide Short Selling 196 (available here), first published in September 2008. The ASIC also advised industry participants to monitor ASIC Information Sheet 98: Short selling: Short position reporting (available here), which provides further information.