Short selling in respect of securities is the sale of securities that the seller does not own at the time of the sale, short selling may either be: &lsquo covered&rsquo or &lsquo uncovered&rsquo (also referred to as &lsquo naked&rsquo short selling). In &lsquo covered&rsquo short selling, at the time of the sale, the seller has borrowed the securities or has otherwise made arrangements to fulfil his obligation to deliver the securities. In &lsquo uncovered&rsquo or &lsquo naked&rsquo short selling, at the time of the sale, the seller is not in possession of securities or has not otherwise made arrangements to meet his delivery obligation.

No, SGX is not banning short-selling.  SGX recognizes that short selling generally plays an important role in markets as it allows for more efficient pricing of securities and facilitates hedging activities. 

However, SGX reminds investors that when they intend to make a short sale, they should have arrangements in place to avoid settlement failures.  Penalties will be levied for settlement failures under the CDP Clearing Rules.

Abusive short-selling, such as selling accompanied by false rumours designed to encourage others to sell, may also be construed as intent to deceive or manipulate the market and is an offence  under the Securities and Futures Act (&ldquo SFA&rdquo ) and shall be liable on conviction to a fine not exceeding $50,000 or to imprisonment for a term not exceeding 2 years or to both.

Marking of sell orders for securities: Brokers may not enter a sell order if the investor has not informed them whether an order is a short sell order (whether covered or uncovered) or a normal sell order.  SGX&rsquo s Trading Members must put in place systems and procedures to collect such sell order information from investors. 

Publication of short selling information: Short selling information on aggregate short sales volume and value for each counter will be published by SGX on its website at the start of each trading day, based on orders marked as short sell executed the previous trading day.  Investors can access the report at:   www.sgx.com/shortselling  from 11 March 2013

The requirement to mark Short Sell Orders will apply to all securities traded on SGX, including structured warrants and Exchange Traded Funds (&ldquo ETFs&rdquo ).  Extended settlement contracts are not included.

All market participants, including investors and SGX-ST Trading Members, must mark their sell orders.

Exemption for Market Makers

Presently, market makers, which include Designated Market Makers and such other entities appointed by SGX to carry out a market making function, are not required to mark sell orders of securities for which they are obliged to market make. This is because they may submit sell orders, where they do not own the security to be sold, as part of their market making function. 

The exemption does not extend to Trading Members with facilitation desks that provide liquidity to their clients.

  10. How accurate is the published short sales data?