The Australian Securities and Investment Commission (ASIC) have confirmed that it would lift the ban on Covered short selling of non-financial securities from opening trade on 19 November 2008.
The ban on Covered short selling of financial securities will continue until at least 28 January 2009.
Naked short selling remains banned.
New categories of Long sales and Short sales have been introduced.
Brokers must ask clients whether a sale is a Long or a Short sale. Clients are obliged to inform brokers and brokers must report all Short sales to ASX who will issue a report the next day.
Impact on CMC Markets customers:
- Long Selling: You may sell stock you own as normal. However, you must confirm to us at the time of sale that you own the stock you are selling (i.e. confirming that the sale is a Long Sale.) You simply need to indicate to the dealer over the phone that you would like to “Sell Long”.
- Short Selling: Customers are not able to complete a Short Selling Transaction through CMC Markets stockbroking as CMC Markets Stockbroking does not authorise its clients to conduct short selling transactions on securities, nor provide a facility for doing so.
- CFDs: Trading as normal.
Definitions
Financial Securities: entities in the S&P/ASX 200 Financial Index, plus property trusts and the following five APRA supervised listed entities not in the index: WES, FCL, ROK, WBB, and CIX.
Non-Financial Securities: any listed stocks not in the above definition.
Covered short selling is when the seller does not own but has a presently exercisable and unconditional right to vest the product through a 'firm' (legally binding) commitment from another party (like a stock lender) to deliver the stock in place before the sale Note that 'Best endeavours' to deliver is not sufficient.
Naked short selling is where the seller does not own, nor have a presently exercisable and unconditional right to vest the products in the buyer. That is the seller does not own and does not have a 'firm' (legally binding) commitment from another party (like a stock lender) to deliver the stock in place before the sale. Day Traders will need stock to sell. An informal promise to borrow/locate stock is not enough.
Long Sales: sale of stock you own.
Short sales: refers to Covered short selling and Exempt Sales.
Exempt Sales: permitted Covered sales of financial stocks (e.g. by market makers) whilst the ban on short selling financials is in place.
For further information regarding the ASIC guidelines on short selling please refer to the
ASIC website
CMC Markets Stockbroking will continue to provide updated information on Short Selling as and when they become available from ASIC and ASX.
Should you have any questions regarding this, then please contact the Client Services team:
Telephone: 1300 360 071
Email:
brokingservice@cmcmarkets.com.au
Kind regards
CMC Markets Stockbroking
This notice is given to clients by CMC Markets Stockbroking in accordance with Part C.49 of the Terms and Conditions of dealing with CMC Markets Stockbroking
