2 October 2009

Short Selling Disclosure Regulations

The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP, today released draft regulations and commentary material in relation to the disclosure of short selling information under the Corporations Amendment (Short Selling) Act 2008.

The draft regulations require:

  • the reporting of covered short selling transactions to market operators. This information will be aggregated and publicly released by market operators on the following business day. This is consistent with the existing Australian Securities and Investments Commission's (ASIC) interim disclosure regime; and
  • the reporting of short positions by short sellers to ASIC. This information will be aggregated by ASIC and released to the public four business days after the positions are taken. The reporting of short positions will commence on 1 April 2010.

These draft regulations have been developed following both public consultation and targeted consultation with key stakeholders.

"The regulations strike the right balance between the market's interest in knowing what short selling is occurring and the legitimate interests of businesses in not having their trading strategies compromised," Mr Bowen said.

"This disclosure timetable was finalised following close consultation with the corporate regulator and industry, and was determined to be the most liberal approach that was consistent with maintaining market integrity.

"This regime will give people the first complete overview of short selling in Australia.

"The regulations will finalise the Government's enhancement of the regulatory regime governing short selling, which also included banning naked short selling and providing ASIC with enhanced powers in relation to short selling activity."

The Government has completed its consideration of the policy issues associated with the regulations but is seeking comments from stakeholders on a range of technical issues (outlined in the commentary material) by 23 October 2009 with a view to having the regulations considered by the Executive Council in November 2009.

The Government will review these regulatory arrangements 12 months after the commencement of the new positional reporting requirements.

The draft regulations and related commentary material can be downloaded at www.treasury.gov.au.

2 October 2009


Attachment

Summary of Draft Regulations

  • The regulations propose to require reporting of two forms of short selling information:
    • Transactional reporting: This involves reporting of the aggregate number of shares in a particular security sold in covered short sale transactions on a given day. This information will be reported through Australian financial services licensees (brokers) to market operators. The market operator then releases the information on the following day. This is consistent with the existing ASIC interim disclosure regime.
    • Positional reporting: This involves reporting of all short positions directly to ASIC. ASIC will aggregate all short positions in a particular security and release this information to the public four days after the position were established. A person is required to continue reporting this position to ASIC on a daily basis until the position no longer exists. Positional reporting is scheduled to commence from 1 April 2010 to provide industry and ASIC with sufficient time to assist to the reporting requirements.