The Securities & Futures Commission today issued a consultation paper to gather public input on increasing short position transparency. The paper outlines the objectives and seeks comments on further enhancing the transparency of short selling in Hong Kong.

The move was recommended in the Regulation of Short Selling report published by the International Organisation of Securities Commissions' Technical Committee. The proposal deals with the organisation's principle that short selling be governed by a reporting regime to ensure timely information disclosure.

The consultation paper lays down a number of approaches that may be taken and the issues that will have to be considered and addressed in formulating requirements.

Hong Kong's current short selling regulatory framework is robust and embodies the four principles recommended in the report. In terms of transparency, short sales executed on the Hong Kong Stock Exchange must be flagged and aggregated covered short selling turnover is published daily. Yet, no information is currently available on the outstanding short position in the market.

Increased transparency will facilitate a better understanding of the overall dynamics of short-selling activities in Hong Kong and will enable the commission to better perform its regulatory functions.

Comments should be submitted by the end of September.