The Government has announced details of the final bill to be introduced into Parliament this week, which serves to implement a legislative blanket ban on naked short-selling.
The Corporations Amendment (Short-Selling) Bill 2008 includes a comprehensive disclosure regime for permitted covered short-selling.
Under the legislation, the Australian Securities and Investments Commission (ASIC) will hold the power to impose regulations on transactions that are substantially similar to short-selling.
The regulator will also be able to grant exemptions from the naked short-selling prohibition, in the limited cases where some non-speculative naked short sales are necessary to ensure the ordinary operation of the market.
The final amendments made to the bill will ensure total transparency in the use of covered short-selling, Minister for Superannuation and Corporate Law Senator Nick Sherry said.
“The bill fills a gap in law… it will boost transparency, enhance the integrity of Australia’s markets and complement action already taken to strengthen our financial system,” he said.
ASIC also announced yesterday it would lift the current ban on short-selling of non-financial securities, from opening of trading on November 19, 2008.
However, the corporate watchdog confirmed it would continue the ban on covered short sales in financial securities.
ASIC said the ban on short-selling of financial securities will remain in place until at least January 27, 2009, consistent with many other jurisdictions, while the Australian Securities Exchange (ASX) will maintain the ban on naked short-selling indefinitely.
ASIC confirmed that financial securities would be those comprising the S&P/ASX 200 Financials, including property funds, along with five other Australian Prudential Regulation Authority (APRA) regulated businesses.
