Hong Kong has an effective regime for short selling on the stock market because naked short sales are not allowed, Hong Kong Securities and Futures Commission Chief Executive Officer Martin Wheatley said Monday.
Addressing the second annual conference of Hong Kong Investment Funds Association, Wheatley said Hong Kong also put in place strict buying-in requirements, among others, and as a result, the daily volume of short selling has stayed around 8 percent of the market total.
"We are lucky in the sense that we learned from our last crisis and we have an effective short selling regime in Hong Kong," Wheatley told the audience.
The United States and British stock market allowed naked short selling and that around 30 percent of its total turnover came from short selling. The share of short selling was even higher amid the recent financial turmoil, allowing speculators to push down the price and destroy the company involved, he said.
"But unfortunately, those markets around the world that did not act early enough have gone to the other extreme and ban short selling completely," Wheatley said.
"Our position is that short selling is a beneficial component of a well-run and a well-functioning market."
However, the Securities and Futures Commission will act appropriately and quickly if there are signs of abuse leading to a sudden rise in short selling trading volume or settlement failures, he added.
(Xinhua News Agency October 1, 2008)
