HONG KONG: Issues Relating to Filing of Reportable Hong Kong Short Selling Position Form

Friday June 29 2012

In an email circulated to all subscribers, the SFC has stated that it has been monitoring the filing of reportable Hong Kong short selling position by market participants following the Securities and Futures (Short Position Reporting) Rules coming into effect on 18 June 2012 and observed some incidents of concern.

Recognising that reporting short position via the Short Position Reporting Service is new and there may be still some aspects of the system that market participants are not yet familiar with, the SFC would like to remind market participants to take note of the following when they next report their short positions:

1. To correct any information previously submitted for the same reporting day, you are required to submit a new Reportable Short Position Form (Form) and state in the “Submission Remarks” box on the Form (this was explained on page 17 of the User Guide)

(i) the reason(s) for re-submission; and
(ii) the previous submission reference number(s) (for example, SFC12107PT238L) assigned in the previous submission acknowledgement.

Absent of the information in (i) and (ii) above, the SFC may regard the person that has filed more than one report in relation to a reportable short position as providing inconsistent and misleading information to the regulator.

2. Please check the stock code and name of the specified shares comprised in the reportable short position as there may be occasions for confusion, for example, stock code 3968 CM BANK (China Merchants Bank Co., Ltd.) could be mistaken for 133 CHINA MERCHANTS or 144 CHINA MER HOLD.

3. Please ensure that the correct closing prices determined and published by the Stock Exchange of Hong Kong are used for calculating the net short position value. In this regard, please take note that some information vendors may carry the last traded price instead of the specified closing price.

Market participants who have questions regarding requirements under the Rules are strongly encouraged to review the Rules, the past public consultation and consultation conclusions papers relating to short position reporting, the FAQs and the Guidance Notes posted on SFC’s website, and if necessary, consult their compliance officer or legal adviser.