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HK to require net short selling reporting

Wednesday 19 October 2011 - by Will Henley

Hong Kong's securities regulator has said it plans to deliver new short selling rules requiring net short position disclosures by the end of March next year.

It follows reluctance among senior officials to follow suit with European regulators in opting for outright bans on short selling during turbulent periods on the markets.

Ashley Alder, chief executive of the Securities and Futures Commission, said on Tuesday that the disclosure rules follow input from the industry. As a result, traders would not need to report short positions on a gross basis, he said.

"Requiring the market to report short positions on a net basis would be the more pragmatic course of action to progress the SFC's goal in enhancing its ability to access data on short positions and monitor short selling activities in the Hong Kong market," he said.

"[This will also] provide the market with more information about short selling activities, without placing undue burden on the industry," he added.


Alder insisted that Hong Kong already has a robust short selling regime in place, adding that it is "more efficient" to demand data that firms already posses or can easily get hold of than forcing them to re-configure systems to report new information.

Earlier this month, KC Chan, secretary for financial services and the Treasury, said an outright ban on short selling would not prevent dramatic falls in stocks, saying it was more important to monitor positions.

"When markets fall, it's not like we can stop it by just banning short selling," Chan said, according to Bloomberg news agency. "Shorting activities are so far relatively normal and we're keeping a close watch."


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