IMA opposes public disclosure of short selling information

The Investment Management Association, the US-based Investment Company Institute and Australia's Investment Financial Services Association said they backed timely disclosure to the chief market regulator or supervisor of short sale position above a minimum amount in order to combat market manipulation.

But they said it was essential the regulatory regime adequately protect confidentiality of the data provided to regulators.

In a statement, they said: "We 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."

They added an effective public disclosure regime would 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.

The three associations collectively represent US$15.54trn of assets under management.

The statement comes as The Financial Services Authority said it would extend its temporary market disclosure regime until June 30 in order to "reduce the potential for abusive behaviour and disorderly markets" (PP Online, January 6).