To identify manipulative short sales, ASIC should not only gather information on short-selling, but also look at the buying behaviour of sellers in the days after a suspicious transaction, according to Plato managing director Don Hamson.
"This would give a much better picture of manipulation," Hamson said at a Russell Investments luncheon on Friday.
The proposed disclosure rules for short-selling, as defined in the Corporate Amendments (short-selling) Bill 2008, require a seller to disclose short-sales to the broker, who in turn will be required to disclose them to the market operator (such as the Australian Securities Exchange).
Currently, however, that is where the monitoring process ends.
Hamson has been in discussions with the regulator and Treasury about the short-selling ban and the proposed legislation on disclosure of transactions, in his capacity as member of the Investment and Financial Services Association (IFSA).
"I have been trying to assist ASIC and Treasury in terms of what they should actually collect, to see what does work. To be honest, I do think they need a little bit of help there," he said.
Hamson has made use of long and short strategies for many years and is a clear proponent of the strategy. He has previously argued that the short-selling ban has done little to prevent volatility, while it has reduced liquidity in the market.
