The Investment Management Association (IMA), Investment Company Institute (ICI) and the Investment and Financial Services Association (IFSA) call for a sound short selling regulatory regime. Collectively, they represent US$15.54 trillion of assets under management.
The IMA, ICI and IFSA are all committed to supporting regulatory reform designed to enhance investor confidence and combat market manipulation. The development of a practical short selling regulatory regime is a critical matter for securities markets around the world in order to promote confidence and stability.
IMA, ICI and IFSA are firmly opposed to market manipulation or abuse. Where the specific concern is market manipulation, regulators should have both the information and capability to monitor and investigate thoroughly. The associations support timely disclosure directly to the chief market regulator or supervisor of short sale positions above a de minimis amount.
It is essential that the regulatory regime adequately protect confidentiality of the data provided to regulators. IMA, ICI and IFSA are opposed to public disclosure of short selling information, which has the potential to increase downward selling pressure, facilitate the frontrunning of a fund’s security positions and reduce the incentive for proprietary research.
While it is critical that market regulators have access to trading information of individual market participants to protect against market abuse, public disclosure should be designed to promote market confidence and not to facilitate trading strategies.
The associations believe that if any public disclosure regime is to be established effectively, this is best achieved by a market or regulator publishing a single aggregated net short-interest position for each stock on a periodic, but sufficiently delayed, basis.
IMA, ICI and IFSA will continue to liaise with government, the regulators and the International Organization of Securities Commissions (IOSCO) regarding the development of a sensible short selling regulatory regime which promotes market integrity and confidence.
L.D.