Published On: Thu, May 26th, 2011

HK SFC Consults on Legislation to Implement Short Position Reporting

The Securities and Futures Commission (SFC) has launched today (May 25) a consultation inviting the public to comment on the proposed subsidiary legislation that will give effect to the short position reporting regime announced earlier in the Consultation Conclusions on Increasing Short Position Transparency (Note 1).

Under the regime, a short position that hits the threshold of 0.02% of the issued share capital of a listed company, or a market value of $30 million, whichever is lower, has to be reported to the SFC on a weekly basis. In general, the party who beneficially owns the short position will be responsible for the reporting.

The reporting requirement will only apply to the constituent stocks of the Hang Seng Index, the Hang Seng China Enterprises Index and other financial stocks specified by the SFC. The reporting requirement may be tightened to further enhance transparency and monitoring in contingency situations.

The SFC will provide an electronic reporting facility and a template for reporting. Aggregated short positions of each stock will be published, on an anonymous basis, a week after the receipt of the reports.

“One of the lessons learnt from the recent global financial crisis is the importance for regulators to have access to useful information,” said Mr Martin Wheatley, the SFC’s Chief Executive Officer. “Regulators can make use of this information to assess the market dynamics, and if necessary, take appropriate regulatory action to address any potential emerging risks.”

Mr Wheatley added that “a systematic collection of data on short positions will complement the information on short selling transactions that we currently collect from The Stock Exchange of Hong Kong Ltd. The two sets of data taken together will enable the SFC to have a better picture of the overall short selling activities in the Hong Kong market.”

Interested parties are invited to submit their comments to the SFC by 30 June 2011. Comments may be submitted online via the SFC website (, by email to, by post or by fax to 2521 7917.


1. On 2 March 2010, the SFC published the Consultation Conclusions on Increasing Short Position Transparency unveiling a short-position reporting regime that was formulated after taking into account industry feedback and the domestic market situation. It was announced then that the public would be consulted in due course on the subsidiary legislation to implement the regime.

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