On 23 September 2008, Treasury released an exposure draft on the Australian Government's Corporations Amendment (Short Selling) Bill 2008 (Bill) which requires the disclosure of covered short sales transactions on Australian financial markets. Submissions on the Bill must be made to Treasury by 21 October 2008.
The Bill, which builds on the Australian Securities and Investments Commission (ASIC) interim reporting requirements for covered short sales on a listed market (see ASIC CO 08/751) proposes to introduce disclosure requirements for covered short sale transactions, which are not currently caught by the disclosure obligations under section 1020B(5) of the Australian Corporations Act.
The Bill proposes the insertion of two new provisions (s1020BA and s1020BB) in the Corporations Act. The proposed provisions require sellers of s1020B products (i.e. securities, managed investment products, government bonds and derivatives) to advise their executing stock broker when the sale is a covered short sale. The broker must in turn report details relating to the information disclosed to it, to the relevant market operator. The requirement also applies to brokers trading on their own behalf in this case the broker must disclose the covered short sale directly to the relevant market operator.
The Bill will apply to sales made on a licensed market and sales that occur through on or off market crossings. The disclosure requirement will apply to both Australian and overseas sellers.
Regulations will specify the mechanics and particulars of the disclosure requirements and procedures. The Government has not indicated when draft Regulations will be released.
It will be an offence under the Bill if a seller or broker does not disclose details of a covered short sale at the time and in the manner required.
The Bill and related materials are available here. Please let us know if you would like any assistance in making a submission on the Bill.
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