Singapore Exchange Proposes Short Sales Report to Increase Market Transparency
To facilitate greater market transparency, Singapore Exchange (“SGX”) is proposing new rules and measures to provide more information on short sales activities in the marketplace. SGX is seeking public comments on the proposed rules that require the marking of all sell orders, either as a normal sell order or a short sell order. With the collated data, SGX proposes to report the short sales volume and value by counter for each trading day.
Timely short selling information provides greater disclosure and contributes to enhanced accountability. SGX regards greater transparency as beneficial to market participants.
This consultation exercise is introduced after close discussions with the Monetary Authority of Singapore (“MAS”) following SGX’s public consultation in November 2008 on transparency measures in relation to short-selling. The MAS is fully supportive of the proposed measures, and views them as a positive step towards increasing the transparency of short selling activities in our market.
Marking Sell Orders by Investors
SGX defines a Short Sell Order as “any sell order where the seller does not own the quantity of security to be sold at the time of placing the order”. For example, where an investor sells a quantity in excess of what he owns for a security, he can enter two separate sell orders. One order is for the portion he owns and the other for the portion he short sold.
The requirement to mark sell orders apply to all securities listed on SGX-ST, with the exception of Extended Settlement Contracts. This marking of sell orders also extends to Direct Business trades and the selling Trading Member must indicate a short sell order or a normal sell order in the Married Trade Reporting
Establishing Systems and Procedures by SGX Trading Members
To facilitate the marking of sell orders, SGX requires its Trading Members to put in place safeguards and procedures to ensure that customers indicate their sell orders, whether the trade is conducted via the internet, phone orders and/or the members’ order management systems.
Each of the respective trading interfaces must require the customer to determine whether a sell order is a short sell order or a normal sell order at the point of order entry. The Trading Member or its Trading Representative cannot transmit a sell order to SGX if the customer has not made his/her order indication. The Trading Member is however not required to verify the accuracy of the customers’ orders.
The details of the proposed amendments of the SGX-ST rules can be found in Appendix A.
The consultation paper, which explains the rationale and proposed amendments in detail, will be available on SGX’s website at www.sgx.com from today. Market participants and members of the public can give their feedback and suggestions on the above proposed amendments from today until Thursday, 12 AUGUST 2010 via email and post/courier or fax.
Post/Courier: Singapore Exchange Limited
2 Shenton Way,
#19-00 SGX Centre 1,
Attn: John Lim, Regulatory Policy
Fax: 6534 2207