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ASIC clears up short-selling reporting

Tuesday 11 January 2011 - by Andrew Hickley

The Australian Securities and Investment Commission has announced that short-sellers will have to report the cumulative price of long and short positions they hold in different investments, in a clarification of previous regulation.

Since 1 June 2010 short-sellers have been required to report to the ASIC their position in listed securities so that the regulator can aggregate and publish the number of reported short positions to the markets.

However the ASIC has said that it has witnessed diverging practices in calculating and reporting positions, particularly from hedge funds and investment banking firms.

As a result, it has introduced the measure from 17 January to ensure markets have a "more accurate representation" of the overall short positions is held in securities and managed investment products.

In practice this means that a fund manager would have to declare when he is short-selling shares from one of fund to another.


In a statement, the regulator said: "A fund manager who has 4,000 XYZ Ltd shares in its capacity as a trustee of fund A and is short 1,000 XYZ Ltd shares in its capacity as trustee of fund B must not 'net-off' these positions held in different capacities and must report to ASIC a short position in XYZ Ltd of 1,000 shares."

The changes stem from a consultation launched into the new regulation two months after its introduction.


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