• RSA FSCA issued draft conduct standard re reporting and disclosure of short sales.
• Follows December 2018, RSA FSCA released discussion papers on short selling.

Draft Standard

• Current regulatory framework in South Africa does not prescribe requirements for the reporting and disclosure of short selling on trading platforms of licensed exchanges.
• Development of draft conduct standard also took into account industry comments received on Discussion paper on the implementation of  short selling reporting and disclosure framework that was published for comment in November 2018.

Benefits

• Envisaged that transparency in short selling will help deter market abuse and reduce the risk of disorderly markets posed by short sales.
• Regulatory framework will also provide early warning signs of a build-up of large short positions, alerting FSCA to potential market abuse or emerging systemic risks.
• Will enable FSCA to effectively monitor market, take appropriate action where needed.
• Public access to information on short sales will improve insights into market dynamics, aid transparency, and make available important information to assist price discovery.
• Proposed regulations consist of a short sale transactional reporting / public disclosure framework, and short selling positional reporting / public disclosure framework.

Effectiveness

• Submissions on draft conduct standard must be submitted on or before 17 May 2023.