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Monday 27 October 2008

AD08-44 Short selling relief for convertible securities expanded

On Friday, 24 October 2008 ASIC expanded its existing relief from the covered short selling ban for people who hold a convertible security (eg a convertible bond) to hedge their exposure to the underlying share. The change means that people can short sell to hedge exposure through a fixed conversion price or ratio convertible security. The current relief is limited to convertible securities where the number of shares issued on conversion is referable to the volume weighted average price (VWAP) of the share over a period.

There is a similar commercial need to hedge exposure as a result of holding a security that converts at a fixed price or ratio and a security that converts by reference to VWAP. A policy behind this short selling relief is to facilitate fundraising by companies.

ASIC has made a minor variation to Class Order 08/751: Covered short sales to effect the change – refer to Class Order 08/801: Variation of Class Order [CO 08/751].

Last updated: 27/10/2008 12:00