Australian regulator begins publishing of aggregated short positions

The Australian Securities & Investments Commission (ASIC) has begun publishing aggregated short positions as of today (22^nd June 2010).

Australian short sellers have been required to report their short positions to the ASIC since the beginning of June, during which time more than 570 short sellers have lodged more than 65,000 positions. All published aggregated data refers to positions held four reporting days ago, meaning the first published data refers to positions held on 16^th June 2010.

On that day, Fairfax Media was the most shorted stock in the Australian market, with almost 272 million reported positions out of 2.35 billion shares on issue – meaning 11.53% of total stocks were short positions.

The ASIC did not require short sellers to reveal their identity or their individual short positions, but instead said that the aggregated data would help investors identify potential risk in stocks.

“Short position reporting provides a snapshot indication of the bearish sentiment towards a particular stock at any point in time. It also indicates the amount of overhang in the stock that will need to be covered at some point by short sellers purchasing shares,” the ASIC said in a statement.

“For investors, this information may indicate the risk involved in trading the stock. This reporting, complemented by short selling transaction reporting and securities lending reporting (available from the Australian Securities Exchange), provides greater transparency on short selling activity in Australia.”

However, the ASIC warned investors that its aggregated data was based on reports from individual short sellers, adding: “While we will monitor compliance with short position reporting and provide additional guidance where necessary, we are unable to verify the accuracy of all individual reports submitted to ASIC, nor to verify that all short sellers in our market (both in Australia and overseas) are lodging reports.”

The short position reporting can be found at www.asic.gov.au/short-position-reports

The new launch coincided with news that the ASIC had entered into a memorandum of understanding with the US Financial Industry Regulatory Authority (FINRA), which will see the two organisations provide mutual assistance and exchange information in an effort to protect market integrity.

“Because the US and Australian financial markets are highly globalised, it is crucial to both agencies that we have effective cooperation agreements with key partner jurisdictions,” commented ASIC chairman, Tony D’Aloisio.

“This MOU will enhance the supervision of financial markets in both Australia and the US. This is particularly important in light of ASIC’s new market supervision responsibilities.”