ASIC is reviewing its approach to short selling, including a proposal which would allow market makers of certain exchange-traded products to naked short sell units in an ETF or a managed fund.
The law enforcement agency is seeking feedback on several proposals relating to both naked and covered short selling. The consultation coincides with the sunsetting of a number of related class orders, ASIC said.
ASIC is proposing to grant legislative relief to "allow market makers of certain exchange-traded products to naked short sell units in an exchange traded fund or a managed fund in the course of making a market in those products."
It also wants to, in the context of corporate actions, to "allow naked short sales of unissued products during a deferred settlement trading period."
The third proposal would allow naked short sales in connection with initial public offering (IPO) sell-downs made through a special purpose vehicle (where existing shareholders of a company sell their shares through a special purpose on the condition that the company conducting the IPO is listed on the ASX).
ASIC is also looking to change the relevant time that short positions are calculated; and remake a number of short selling class orders that are due to 'sunset'.
Following consultation, ASIC aims to consolidate all short selling-related relief into a single instrument.
ASIC commissioner Cathie Armour said: "It is important that short selling continues to be regulated appropriately so that our market remains orderly and transparent. The proposals strike a balance between providing efficiency and certainty and reducing the burden of compliance for businesses, and managing the risks that short selling poses to market integrity."
Submissions can be made up to 20 June 2018, with a view to issuing a final consolidated instrument before 1 October 2018.