ASIC provides relief for naked short selling

ASIC provided legislative relief to ETF market makers, alongside changes to short selling laws.

With ASIC instruments due to expire, the corporate regulator issued a short selling instrument, which it said continues the effect of those instruments due to expire.

ASIC said the new relief and modifications allow ETF market makers to make naked short sales in ETFs and managed funds in the course of making a market in units in those funds.

The corporate regulator added the relief would facilitate market making, providing liquidity to the market.

ASIC said it had given individual no-action positions for the last 10 years, allowing market makers of certain ETPs to make naked short sales. According to the regulator, the time is now right to provide the action with legislative relief.

As part of the changes, ASIC's short selling instrument will allow naked short selling in the context of initial public offering sell downs where a special purpose company offers shares to IPO investors before it has an unconditional right to those shares.

ASIC also said the instrument would provide firms with the option to nominate to calculate their short positions at the global end calendar time, rather than 7pm Sydney time as they currently are.

Read more: ASIC
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