The Australian Securities Exchange (ASX) has today released its recommendations in response to the Government’s recent Exposure Draft of the Corporations Amendment (Short Selling) Bill 2008.
ASX supports greater transparency of short selling and stock lending activities. It agrees that increased transparency will improve price discovery and the robustness of the equity settlement process, and reduce the potential opportunities for market abuse.
ASX’s views draw on the results of its own public consultation on these topics in March 2008, when over 40 submissions were received, and subsequent communications with market users.
In summary, ASX recommends that the regulations foreshadowed by the Government should be designed to achieve:- Real-time identification or ‘tagging’ (by clients to brokers and brokers to ASX) of those orders that involve covered short sales;
- End of day reporting by brokers to ASX of their net short sale positions to enable publication the next day by ASX of the aggregated data on a per security basis; and
- Identification by custodians and other CHESS settlement system participants to the relevant ASX subsidiary of details of settlement instructions that involve stock borrowing and lending, to enable publication by ASX of the aggregated data on a per security basis.
Adequate time needs to be allowed for financial intermediaries to implement the systems and process changes that are pre-conditions to the successful introduction of these recommendations to improve financial market transparency.
Click here to download ASX’s position paper.
