New MAS rules on short-selling, short-position reports to kick in on Oct 1
Investors with short positions above a certain threshold
will soon have to report them to the Monetary Authority of Singapore (MAS), and
not just the bourse operator.
The move, announced on Monday, will affect investors with a
short position of at least 0.2 per cent of total issued shares or units or at
least S$2 million - whichever is lower - who are trading in securities listed
on the Singapore Exchange (SGX).
The MAS said the move - which takes effect on Oct 1, 2018 -
"will improve transparency on short-selling activities in the securities
market and enable investors to make more informed trading decisions".
Short-selling refers to selling securities - such as shares,
units or structured warrants - that a trader does not actually own at the time
of the sale.
The selling may be "covered", with the seller
having borrowed the securities or made arrangements to deliver them.
It may also be "uncovered" or "naked",
which is when the seller neither holds the securities nor has made arrangements
to deliver them to the buyer.
The MAS said that it will publish aggregated short positions
for each security every Wednesday, without disclosing the identities of the
short sellers.
Traders who meet the threshold must report their positions
through an online portal, dubbed the Short Position Reporting System, at
https://eservices.mas.gov.sg/sprs/
The SGX already requires investors to mark sell orders as
"long" or "short" and publishes both daily and weekly
reports on short-selling activity. This rule has been in place since March 11,
2013.
The new MAS requirements, which get their teeth from the
Securities and Futures (Short Selling) Regulations 2018, will "provide
statutory backing to SGX's trading rules", the state regulator said.
Short-selling is not banned in Singapore, but failure to
settle a trade will earn penalties under the central depository clearing rules.
"Abusive" short-selling - for example, with the
spread of false rumours - could also be prosecuted as market manipulation or
deception under the Securities and Futures Act.
Annabeth Leow
28 May 2018
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