Bloomberg News

Hong Kong Exchange Considers Central Short-Selling Facility

October 24, 2011

(Updates with response from Hong Kong Exchanges & Clearing in first paragraph.)

Oct. 24 (Bloomberg) -- Hong Kong’s bourse is considering a central stock borrowing and lending facility, Scott Sapp, a spokesman for Hong Kong Exchanges & Clearing, said today via e- mail in response to questions from Bloomberg.

The bourse operator, the world’s second-largest by market value, “will explore the feasability” of establishing such a service, Sapp said. Sing Tao Daily, a Chinese-language newspaper, reported this morning that the exchange aims to facilitate short selling for both institutional and retail investors through the program, citing unidentified sources.

The Hong Kong Financial Services and Treasury Bureau plans to introduce legislation soon to improve the reporting of securities short-selling, according to e-mailed statements Oct. 11. K.C. Chan, Hong Kong’s secretary for financial services and treasury, said on Oct. 6 that the government will not ban short- selling.

Regulators in Asia and Europe have restricted the practice this year to quell market volatility. Greece has lengthened its ban until Dec. 9 and South Korea has forbidden short selling until Nov. 9.

Short sellers sell borrowed shares with plans to buy them back later at a lower price, a practice politicians and some investors blame for roiling markets.

--With assistance from Stanley James in Hong Kong. Editors: Nick Gentle, John McCluskey

To contact the reporters on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net; Eleni Himaras in Hong Kong at ehimaras@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net


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