On 25 May 2009, ASIC lifted the ban it had imposed on the covered short selling of financial securities, effective from 10am that day.

The previously announced disclosure requirements are still in force for all permitted short sales.

The current Australian position is summarised as follows:

  • Naked short selling is banned except for the following:
    • The giving or writing of certain exchange traded call options;
    • Financial products which are unobtained at the time of sale, but will be obtained by the exercise of an option registered with Australian Clearing House Pty Limited or SFE Clearing Corporation Pty Limited;
    • In relation to certain corporate bonds (if the amount of bonds on issue with same maturity exceeds $100,000,000 in value);
    • In relation to bonds issued by a government.
  • Covered short selling of all securities is allowed subject to the following disclosure requirements:
    • The seller must disclose the type of sale it is (i.e. long sale or short sale) to their broker.
    • If the seller does not disclose the type of sale requested, the broker must ask whether the sale will be a short sale.
    • The broker must disclose to ASX their net covered short sale position at 7pm on each trading day by 9am the following day.

ASX is also hoping to implement real-time reporting of short sales through an automated process in the near future.

ASIC has the power to reimpose bans on short selling with immediate effect using its powers under the new Corporations (Amendment) Short Selling Act 2008 if it considers market conditions warrant such action.

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