AIMA

Short Selling

Short selling has been a topic of intense regulatory and legislative scrutiny since a number of countries introduced bans in the wake of the financial crisis. 

In the USA, having eliminated all short sale price test restrictions in July 2007, the SEC introduced an ‘alternative uptick rule’ in 2010 and has recently consulted on  the feasibility, benefits and costs of requiring short position reporting of publicly listed securities. 

In the EU, between 2011-2012 a number of Member States introduced temporary bans on the taking of net short positions in the stock of specified financial institutions. These have now been repealed subject to the provisions of Regulation (EU) No. 236/2012 on Short Selling and Certain Aspects of Credit Default Swaps (SSR) which entered into effect on 1 November 2012.

In Hong Kong, the SFC has adopted new rules on short selling and is considering the possibility of creating a centralised stock borrowing and lending facility.