Short selling now under more government scrutiny

The government now has the means to better monitor short selling.

The Securities & Futures (Offences & Penalties) (Amendment) Regulation 2012 is now in effect and its related short position reporting rules are now being implemented by Securities & Futures Commission.

The Financial Services & the Treasury Bureau said the rules stipulate a new short position reporting regime, under which those who hold short positions in specific shares are required to report to the commission.

The bureau said the new reporting regime will assist the commission in collecting more market information, and will strengthen its ability to monitor short selling activities. This is conducive to maintaining Hong Kong's financial stability.

Meanwhile, the Hong Kong Exchanges & Clearing will amend its eligibility criteria to reflect the developments of the securities markets in Hong Kong. The eligibility criterion related to the market capitalisation and turnover velocity will be increased from $1 billion to $3 billion, and from 40% to 50%.

The revised criteria has been approved by the commission and will take effect on July 3.