AIMA

Hong Kong Short Sellling Regulation

Since the Asian financial crisis of 1998, Hong Kong has maintained an enhanced short-selling regime subject to criminal sanctions. Currently, only covered short selling for certain designated securities, as prescribed by the Stock Exchange of Hong Kong, is permitted. Additionally, any short selling must be carried out in accordance with the ‘uptick rule’ (i.e., be executed at a sale price at, or above, the best current asking price) while the short seller must also ensure transparency by maintaining a full audit trail.

The Securities and Futures Commission (SFC) has continually asserted its willingness to strengthen its rules where appropriate and, in 2009, issued a consultation into increasing short position transparency. It issued two subsequent consultations on short position reporting during May and October of 2011.

The SFC is currently considering the possibility of creating a centralised stock borrowing and lending facility.  Should the latter plan be pursued, another public consultation may be expected.

Relevant consultations

SFC Conclusions on Further Consultation on the Securities and Futures (Short Position Reporting) Rules (February 2012)

SFC Consultation Conclusions and Further Consultation on Short Position Reporting Rules (October 2011)

SFC Consultation on Short Position Reporting Rules (May 2011)

SFC Consultation on Increasing Short Position Transparency (July 2009)

AIMA documents

Response to Further SFC Consultation on Short Position Reporting  (November 2011)

Response to SFC Consultation on Short Position Reporting (June 2011)

Response to SFC Consultation Increasing Short Position Transparency  (October 2009)