The Singapore Exchange (SGX) is seeking public comment on new proposals that will require the marking of all sell orders as either normal or short sales. SGX proposes to use the data to report the short sales volume and value for each trading day, on the grounds that short selling information improves the transparency and accountability of the market.
The latest proposals follow on from a public consultation paper issued by SGX in November 2008, which revealed that most respondents favoured the proposed marking of short-selling orders and the publication of short-selling data. The move is also being supported by the Monetary Authority of Singapore, the regulator, which views the proposals as a positive step towards increasing the transparency of short selling activities in the market.
The requirement to mark sell orders will apply to all securities listed on the SGX-ST index, with the exception of extended settlement contracts. SGX defines a short sell order as “any sell order where the seller does not own the quantity of security to be sold at the time of placing the order”. For example, where an investor sells a quantity in excess of what he owns for a security, he can enter two separate sell orders. One order is for the portion he owns and the other for the portion he short sold.
To facilitate the marking of sell orders under the new rules, SGX will require its trading members to ensure that customers indicate their sell orders. The trading member or its trading representative will then be unable to transmit a sell order to SGX if the customer has not indicated whether the order is a short sell order or a normal sell order.