ASIC Starts Reporting of Short Positions
ASIC started daily reporting of aggregated short positions June 22, which will be published on the ASIC website at www.asic.gov.au/short-position-reports.
Short sellers have been required to report short positions to ASIC following the introduction by the Federal Government of new reporting obligations to improve transparency of short sales in the Australian market. In these reports, short sellers disclose to ASIC the size of their overall short positions in specified listed financial products.
Starting today, ASIC is required to aggregate this information and report for each product the total of all short positions disclosed to ASIC for each ‘reporting day’. ASIC publishes this information four reporting days after the date the position is held. This means that the first report published today covers short positions held on 16 June 2010. The reports do not identify short sellers or their individual short positions.
ASIC has been working with industry participants to help prepare them for the new reporting obligations, and ensure they have the appropriate systems in place. During this early stage of the short position reporting regime, ASIC will continue working with industry to ensure a smooth implementation of the new regime.
Short position reporting provides a snapshot indication of the bearish sentiment towards a particular stock at any point in time. It also indicates the amount of overhang in the stock that will need to be covered at some point by short sellers purchasing shares.
For investors, this information may indicate the risk involved in trading the stock. This reporting, complemented by short selling transaction reporting and securities lending reporting (available from the Australian Securities Exchange), provides greater transparency on short selling activity in Australia.
It is important to note that ASIC’s daily aggregated short position reports are reliant on the accuracy of reports we receive from individual short sellers. While we will monitor compliance with short position reporting and provide additional guidance where necessary, we are unable to verify the accuracy of all individual reports submitted to ASIC, nor to verify that all short sellers in our market (both in Australia and overseas) are lodging reports.
The requirement for short sellers to lodge short position reports started on 1 June 2010, with ASIC required to publish the aggregated short position reports from today. Since the reporting obligation for short sellers started on 1 June 2010, more than 570 different short sellers have lodged over 65,000 short position reports with ASIC.
The reporting regime started today follows the introduction by the Federal Government in December 2008 and December 2009 of new legislative requirements (under the Corporations Amendment (Short Selling) Act 2008 and the Short Selling Regulations) to regulate short selling. These requirements included the imposition of specific short position reporting obligations in relation to covered short sales.
In April 2010, ASIC updated Regulatory Guide 196 Short selling, which outlines the legal position about what short sales are permitted, as well as specific reporting and disclosure obligations.
We also released an information sheet,Information Sheet 98 Short position reporting, to help short sellers and systems developers prepare for the new short selling requirements.
Visit www.asic.gov.au/shortselling for further information.