SINGAPORE - The Singapore Exchange (SGX) will report daily short sales volumes for every counter beginning in March as it aggressively pursues leadership status in the field of risk management and transparency, the bourse announced on Tuesday.
In short-selling, traders borrow shares and sell them in the hope of buying them back cheaper in the future, thus profiting from a drop in the share price. With the rule, traders will have to tag as a short sale any trade in which the seller does not own the shares. SGX said it will publish daily reports on the total value and volume of short sales for each counter.
The change comes two- and-a-half years after SGX first issued a public consultation on the topic. In its consultation paper from July 2010, SGX noted that the increased transparency could serve two purposes.
"First, the information may assist with pricing efficiency by serving as input for investors in their investment decisions," SGX wrote at that time.
"Second, the information disclosed may serve an evidentiary purpose for regulators of any abusive short-selling activities."
Market stakeholders welcomed the change.
"If somebody has been shorting, you can know - is it a one-off thing or a continuous thing? It would be a signal or a sign of something to be wary of," said Albert Fong, president of the Society of Remisiers.