ASIC and The New Short Selling Reporting Via FIX Protocol

ASIC FIX SS ReportingAs of June 1 the Australian Securities & Investments Commission (ASIC) has mandated that covered short positions transacted before 7pm on any given trading day be reported via FIX (Financial Information eXchange) protocol message to the regulator. This reporting obligation was precipitated by the short selling bans that effected Australia and swept through most of the global financial markets preceding the Lehmans collapse in September 2008. ASIC lifted the non-financial securities short-selling ban November 19, 2008 and the covered short selling ban of financial securities 25 May 2009. After much consultation with the market and its participants ASIC enacted this new reporting regime.

Under the policy there are two types of reporting obligations – reporting of transactions and of short positions. Transaction reports comprise of an aggregate number of shares for a security sold as a covered short sale on a given trading day. Exchange members will disclose this information to the exchange where the exchange will then disseminate to the public the next trading day. Position reports are submitted directly to ASIC by the entity who is short and after 4 days the regulator will publish aggregated information to the public. The short entity must report every day until they are no longer short and are based on a single equity. So, if you have multiple short positions then multiple reports are required.

There are exemptions of course. If the short position is less than AUD$100,000 or 0.01% of the shares outstanding you are exempt. Also, market makers are exempt if they short ETFs or are hedging risk.

Reporting your short position to ASIC can be done either directly or through an approved third party such as CameronEdge, RapidAddition or TradingScreeen with a the FIX 5.0 specification PositionReport message (MsgType=AP). The ASIC FIX engine is NYSE Technologies Appia 5.2 and can only be connected to over a secure IP with an approved network provider (i.e. BT Radianz and TNS). ASIC will initiate FIX sessions with third parties and act as the Session Acceptor in the point-to-point scenario. Short Sellers are identifiable by an ABN, ACN, ARBN or a BIC code or an ASIC identifier in the case of an overseas Hedge Fund. For point-to-point FIX messages these identifiers are then inserted as a Sender-Comp-ID element.

ASIC has permitted a ‘No Action’ relief period until the June 21 but don’t wait. Of course there is the usual conformance testing but the details of the FIX Rules of Engagement and other information are available at the ASIC website for your reference.

Has anyone gone through the Short Selling FIX reporting process that could share some insights?

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