Skip to main content

Short Sale Tagging – Regulation Impact Statement – Australian Securities and Investments Commission

On 16 July 2012, the Australian Securities and Investments Commission (ASIC) announced new short sale tagging requirements which will apply to the Australian Securities Exchange (ASX) and Chi-X Markets. This measure is due to commence from 1 March 2014. Short selling is an activity where a person enters into an agreement to sell a security that the person does not currently own. The most common reason for engaging in short selling is the investor believes that the security is over-valued and its price is likely to decline in the future. Short selling is also a method of reducing and/or managing risk. The short sale tagging obligation will require market participants to specify, at the time an order is placed, the quantity of a sell order that is a short sale. For “on order” book transactions, this will require specification of the number of products that are short at the time the order is placed into the market. For “off order” book transactions, the number of products that are short will need to be provided in the trade report provided to a market operator. These rules aim to facilitate the efficient collection of short selling information for market participants and accurate and timely dissemination of this information to the market regulator and market. To assist market operators to understand the new rules ASIC has also released Information Sheet 158 Short sale tagging. A Regulation Impact Statement was prepared by the Australian Securities and Investments Commission and assessed as adequate by the Office of Best Practice Regulation.