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ASIC releases short selling guidance

23 April 2010

What's new?

ASIC have released regulatory guidance to assist with compliance with new legal requirements under the Corporations Act and Regulations in relation to short selling.

Regulatory Guide 196 Short Selling: Overview of s1020B clarifies the legal position about what short sales are permitted, as well as specific reporting and disclosure obligations

How does this affect me?

The obligations on short sellers to report short positions commence on 1 June 2010. Sellers who have an existing short position as at 7pm on this date have until 4 June 2010, three working days, to report to ASIC.

ASIC will publish aggregated data on their website from 21 June 2010.

What do I need to report?

Generally, you must report short positions in relation to a section 102B product in a listed entity if:

  • the person:
  • Makes a covered short sale of the section 1020B product on a licensed market
  • At 7pm on the day the person makes that sale, the person has a short position in that product, and
  • That short position is above the reporting threshold
  • If at 7 pm on subsequent reporting days after a person has reported a short position, the person continues to have a short position above the reporting threshold

    • When must short positions be reported?

    Short positions must be reported to ASIC by 9am on the third reporting day after the short position is first created.

    What are the exemptions to short position reporting?

    ASIC has granted relief from short position reporting where, at 7pm on a particular day, the seller’s short position is less than:

    • $100,000, and
    • 0.01% of the total quantity of securities or products in the relevant class

    ASIC advises that sellers may choose to ignore this relief and report all short positions.

    What can we do for you?

    Certainty Compliance can consult with you and ensure that you are able to meet obligations. Please contact a Certainty consultant on (02) 8324 5300 or email enquiries@certaintycompliance.com.au for further information.

    For further information:

    ASIC have published detailed guidance on their website: www.asic.gov.au

    ASIC Regulatory Guide 196: Short Selling is available here