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Singapore central bank issues new rules on short selling

The Monetary Authority of Singapore issued new rules requiring investors to report their short positions and short-sell orders in securities listed on the Singapore stock exchange, effective Oct. 1.

The rules require investors to report short positions exceeding 0.2% of total issued shares, or S$2 million, via an online portal, the Short Position Reporting System. The central bank will publish aggregated short positions of each security on every Wednesday, without disclosing the identities of short sellers.

Prior to Oct. 1, investors can access the reporting system and familiarize themselves with it, the central bank said May 28.

The rule will improve transparency on short-selling activities and enable investors to make more informed trading decisions, the central bank said. The new rule will also provide statutory backing to Singapore Exchange's trading rules which already require securities brokers and banks to report all investor short sell orders to the exchange.

Short selling involves the sale of a security that is not owned by the seller, or that the seller has borrowed, anticipating that the security's price will decline in the short term and it could be profitably bought back at a lower price.

As of May 28, US$1 was equivalent to S$1.34.