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ARTICLE · 23 SEPTEMBER 2008

ASIC Prohibits Short Selling Of “Borrowed” Stock

Norton Rose Fulbright Australia
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Both naked short selling and covered short selling (except for a limited market maker exception) are banned for the time being. ASIC will reassess this position in 30 days time.

AustraliaFinance and Banking
Shane Bilardi
Shane Bilardi
Ron Holzer
Ron Holzer
Robert Sultan
Robert Sultan
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What this means for you

  • Both naked short selling and covered short selling (except for a limited market maker exception) are banned for the time being. ASIC will reassess this position in 30 days time.
  • It appears that brokers could be liable for short selling by their clients, whether they know that the trade is a short sale or not. This is most likely an error in the drafting of the relevant Class Order but we are not aware of any amendments to the Class Order at this stage.
  • In any event, brokers should seek confirmation (preferably written) from their clients before each sale that their client is the owner of the shares being sold and that their ownership is not as a result of a securities lending arrangement.

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