IFSA gives approval to new short-selling regulations

New draft regulations relating to the disclosure of short-selling information has the approval of the Investment and Financial Services Association (IFSA), which said it represents a “sensible and workable” outcome.

The new regulations announced by the Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen, complete the Government’s regulatory regime covering the practice of short-selling, which also includes the banning of naked short-selling and provides the Australian Securities and Investments Commission (ASIC) with more power in relation to short-selling activity.

Under the draft regulations, covered short-selling transactions will be required to be reported to market operators and will be publically released the following day. Short-sellers will also need to report short positions to ASIC, which will in turn release the information to the public four days after the positions are taken.

“The regulations strike the right balance between the market’s interest in knowing what short-selling is occurring and the legitimate interests of businesses in not having their trading strategies compromised,” Bowen said.

IFSA chief John Brogden said the regime will “provide meaningful information to the market while reducing the risk of commercially sensitive information being disclosed”.

Brogden said IFSA will work with ASIC to develop an appropriate threshold under which short-selling positions will not be required to be reported.

The Government will review the regulatory arrangements after 12 months.