Tag: ASIC

Short selling draft laws and ASIC interim rules released

The Minister for Superannuation and Corporate Law, Senator Sherry, has released  draft legislation on the disclosure of covered short sale transactions. Senator Sherry said the Corporations Amendment (Short Selling) Bill has been released in preparation for the possible future removal of the current halt on most types of covered short selling put in place by regulators from 22 September 2008.

Senator Sherry said the draft legislation addresses ambiguity around covered short selling and requires the disclosure of transactions where a seller has entered into a securities lending arrangement to cover a sale.

In particular, covered short sales would have to be disclosed by sellers to a financial services licensee who in turn would be required to disclose the position to the market operator.

Submissions are due by 21 October 2008 and can be sent to: Manager, Market Integrity Unit, Corporations and Financial Services Division, The Treasury, Langton Crescent, Parkes ACT 2600 – or email shortsellingbill@treasury.gov.au.

ASIC has also advised that it has reviewed the operation of the market since its announcements and had opportunity to consult with ASX and industry. ASIC has now issued an advisory which summarises its position regarding the prohibition of naked and covered short selling including permitted exceptions which are in line with overseas developments.

ASIC states that where covered short selling is permitted, the short selling transaction needs to be disclosed in accordance with ASIC Class Order [CO 08/751].

ASIC also notes that the exemptions may change. Accordingly, ASIC will monitor the market to ensure there is no misuse of the exemptions.

Source: Minister for Superannuation and Corporate Law media release No 057, 23 September 2008 ASIC advisory AD 08-22, 23 September 2008

Living with a reverse mortgage – ASIC report

A report capturing the experiences of home-owners with a reverse mortgage has been released by ASIC.

The report, All we have is this house reveals that while the borrowers interviewed were generally satisfied with the reverse mortgages they had taken out, several factors inhibited ‘good consumer decision-making’.

The report identified several factors that have the potential to hinder informed decisions and increase the risk of future problems, including:

* a lack of familiarity with reverse mortgages;
* the complex nature of these financial products and their dissimilarity to other credit products,
* difficulties budgeting for the long-term with access to a large amount of credit, and estimating how much equity might be available at any time in the future;
* a reluctance to consider the risk of declining health in the future and the impact of this on their financial needs; and
* children encouraging their older parents to take out a reverse mortgage or use the funds for the benefit of these children, in inappropriate circumstances.

ASIC’s Executive Director of Consumer Protection, Mr Greg Tanzer said very few of the borrowers interviewed were aware of all the conditions of their loan and the serious consequences of not meeting these obligations.

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