AUSTRALIA: ASIC Consults on Short Selling Proposals

Monday May 14 2018

The Australian Securities and Investments Commission (ASIC) has requested 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. Specifically, ASIC are seeking feedback on our proposals to:

• grant legislative relief to permit market makers of certain ETPs to make naked short sales;
• grant legislative relief from the naked short selling prohibition in the context of corporate actions and initial public offering (IPO) sell-downs;
• change the time with reference to which a short position report for a covered short sale is calculated;
• remake legislative instruments on short selling that are due to expire;
• extend the relief currently available under Class Order [CO 09/774] Naked short selling relief for market makers so that a market maker may make a naked short sale of units in the SPDR S&P/ASX 200 Fund (STW ETF) in order to hedge risks arising from making a market in listed options over the STW ETF;
• modify [CO 09/774] to confirm that the exemption in that legislative instrument does not extend to ‘pre-emptive hedging’; and
• extend the relief currently available to market makers under Class Order [CO 10/288] Covered short sale transaction reporting relief for market makers to ETP market makers that engage in covered short sales of quoted managed funds on the ASX market. Following consultation, ASIC aims to consolidate all short selling-related relief into a single instrument.

Next Steps

Click here for ASIC Corporations (Short Selling) Instrument 2018/__.

Click on the link above for further information.