In this course we take a high level look at short selling. We look at what short selling is, who does it and why, and the extent of its use in Australia’s financial markets. We consider some of the positive and negatives of short selling for investors as well as for the companies they take short positions in.
Finally, we look at the Australian Securities and Investments Commission’s (ASIC) regulatory focus on short selling and how the fallout in global markets during the global financial crisis (GFC) prompted ASIC to place a temporary ban on short selling.
- Define what short selling is and articulate the reasons for its use in financial markets
- Identify the participants that undertake short selling and their motivations behind shorting a stock
- Summarise the advantages and disadvantages of short selling to investors, listed companies and the broader financial markets
- Appreciate the reasons as to why regulators around the world, including the ASIC, chose to place temporary bans on short selling during the height of the GFC
- Appreciate why ASIC has an ongoing regulatory interest in the activities of short sellers
- Explain why the short selling disclosure requirements were implemented
- Outline the short selling/disclosure requirements and the information that this disclosure provides to investors and other market participants
- Appreciate the unique mind-set required of short sellers, reflect on the ethics behind short selling, and note the reasons why short selling has such polarising views among investors and market commentators
Looking for a RG146 CPD solution? This course also forms part of our complete online CPD solution, , which enables financial participants and organisations to meet ASICs RG 146 ongoing training requirements.