A new deal between the Australian Securities and Investments Commission (ASIC) and its US counterpart will allow the national regulator to track undisclosed short selling by US companies in the Australian sharemarket.
The deal will allow the ASIC to ask the US Securities and Exchange Commission to investigate trades in ASX-listed companies by US-based hedge funds where the ASIC suspects evidence of short selling, the Financial Review reports.
The joint agreement, signed last month, reflects concerns that some off-shore funds will not voluntarily comply with new rules that have been introduced amid the global credit crisis that ban short selling.
Similar deals are in the pipeline between the ASIC and the UK's Financial Services Authority and Hong Kong's Securities Regulatory Commission.
The agreement precedes the introduction of tough new laws in Australia that will legally require investors to inform brokers that they are short selling once the emergency ban on the practice is lifted.
Under the proposed laws, failure to disclose short selling will be punishable by six months in jail.
