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Alternative Market Briefing

Hong Kong regulator seeks hedge fund managers' views before implementing reporting regime on short-selling transactions

Wednesday, September 02, 2009

By Christine Gaylican, Opalesque Asia:

The Securities and Futures Commission (SFC) of Hong Kong wants to get the views of hedge fund companies and fund managers until the end of this month to further increase the transparency and reporting on various short-selling transactions.

The SFC has given all investment houses, brokers and other investment fund managers until 30 September 2009 to submit recommendations on how to effectively increase transactional reporting.

"Views are sought on whether derivatives ought to be included in the reporting regime and, if so, whether it should be limited to single stock derivatives or also basket and index derivatives. If derivatives are to be included, the SFC would like the exposure to be calculated on a delta adjusted basis rather than a notional basis (as under the current disclosure of interests regime)," the SFC said in a memorandum issued this week.

Following IOSCO directives, reporting will be mandatory

Deacons Financial Services, a financial information services provider based in Hong Kong, said that the SFC follows the International Organization of Securities Commissions (IOSCO)'s report on the regulation of short selling issued in June-2009.

Though supportive of legitimate short-selling, the SFC is just following directives from IOSCO on creating "a reporting regime that provides timely information to the market or to market authorities" for all short-selling positions to be made ......................

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