Treasurer Wayne Swan and Senator Nick Sherry, Minister for Superannuation and Corporate Law, welcomed today’s announcement by regulators that they were taking interim action on short selling issues as part of global efforts to ensure markets continue to operate in an orderly fashion.
“Australia has a world-class regulatory system and this action today will help ensure ongoing confidence in the operation of Australia’s financial markets,” the Treasurer said.
Action this evening coordinated by the Australian Securities and Investment Commission (ASIC) and involving the Australian Securities Exchange (ASX) resulted in:
- an interim ban on “naked” short sales by removing single stock naked short selling under the ASX Market Rules, operative from the open of trade on Monday;
- a new ASIC Regulatory Guide which clarifies the regulation of short selling under the Corporations Act by providing that to be classified as a “covered” short seller the person selling products must at the time of the sale have a presently exercisable and unconditional right to vest; and
- a new ASIC Class Order which immediately puts in place an interim disclosure regime for covered short sales in preparation for the introduction of a legislative disclosure regime, shortly to be introduced by the Government via the Corporations Amendment (Short Selling) Bill 2008.
“The Government endorses today’s coordinated response which accords with similar action taken this week in the U.S. and the U.K. This action shows that our regulatory system is working well in responding to challenging global circumstances,” the Treasurer said.
“Use of short selling to manipulate the market or to take advantage of the situation currently confronting global financial markets is of significant concern,” Minister Sherry said.
“As previously announced, the Government will be introducing legislation to strengthen disclosure of covered short-selling into the Parliament very shortly,” Minister Sherry said
“Today’s actions reflect the circumstances arising over the last week in global securities markets and lock in with actions taken in London and Washington,” said Minister Sherry.