The Regulation of Short Sellers in Australia

Abstract

Short selling is a topic that generated a great deal of interest during the 2007-08 global financial crisis, with concerns about the practice leading to wholesale reform of Australia’s short selling regulation. Since the GFC, short selling regulation in Australia has remained largely unchanged and attracted little public attention. Yet legislation introduced in the immediate aftermath of a crisis is often defective. It is therefore not surprising that significant criticism has been levelled at short selling laws introduced in foreign jurisdictions in the aftermath of the GFC. This raises the question as to whether short selling regulation in Australia is fit for purpose. To address this question, this article examines the negative and positive narratives surrounding short sellers, which have important regulatory consequences, and the objectives of securities regulation. By considering these narratives and objectives, this article criticises Australia’s current regulation of short sellers, and offers proposals for reform.