Singapore Exchange Limited (SGX) and the Monetary Authority of Singapore have joined forces to make the declaration of all short-selling orders compulsory in a bid to improve market transparency.
The measures will come into place in the first half of 2010 and will require buy-side firms to inform their brokers whether a sell order is a short sale at the point of placing the order. Brokers will then be required to relay the information to SGX-ST, the exchange’s securities platform. SGX-ST will then consolidate and publish aggregated short-selling volumes and value per individual counter before the start of the next trading day.
SGX has also established the meaning and scope of a short-sale transaction, defined as: “any sell-order where the seller does not own the quantity of shares sold at the time of placing the order.”
The proposals will apply to all securities listed on SGX-ST, with the exception of extended settlement contracts.
The plans follow public consultation paper issued by SGX in November 2008 on efforts to enhance the transparency of short-selling activities. The feedback received showed that most respondents supported the proposed marking of short-selling orders and the publication of short-selling data.
According to SGX, enhanced transparency could give market participants additional information for making investment decisions and help deter manipulative conduct.