On 25 May 2009, ASIC lifted the ban it had imposed on the
covered short selling of financial securities, effective from 10am
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
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
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.
DLA Phillips Fox is one of the largest legal firms in
Australasia and a member of DLA Piper Group, an alliance of
independent legal practices. It is a separate and distinct legal
entity. For more information visit
This publication is intended as a first point of reference and
should not be relied on as a substitute for professional advice.
Specialist legal advice should always be sought in relation to any
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