RiskMetrics just released a new study, The Long and Short of It: Improving Short Selling Disclosure in the Hong Kong Special Administrative Region, examining short selling disclosure in Hong Kong. The study found that whilst the Hong Kong short selling regime is robust, disclosure can be improved.

In assessing short sales, the study called for a lower threshold at which they should be disclosed. Currently, short positions of greater than one percent are only subject to mandatory disclosure requirements when investors own more than five percent of a company. In addition, the report called for aggregate stock loan activity to be reported daily in order to provide more transparency around short selling, and for Hong Kong to work closely with China on short selling legislation as the mainland seeks to introduce a short selling regime.

The study also compared the short selling regime of Hong Kong with five key markets around the world. The findings revealed that disclosure requirements and short selling regulations are diverse. This diversity has been compounded by recent temporary measures that have been put in place with the aim of stabilizing markets around the world.

The study comes at a time when regulators globally are looking to act on short selling in their markets, with some placing temporary restrictions on short selling of some form. To access a copy of the report, please visit here.