The International Organization of Securities Commissions (IOSCO) has published a final report entitled Regulation of Short Selling which contains high level principles for the effective regulation of short selling.
The four principles are:
- Short selling should be subject to appropriate controls to reduce or minimise the potential risks that could affect the orderly and efficient functioning and stability of financial markets.
- Short selling should be subject to a reporting regime that provides timely information to the market or to market authorities.
- Short selling should be subject to an effective compliance and enforcement system.
- Short selling regulation should allow appropriate exceptions for certain types of transactions for efficient market functioning and development.
View IOSCO publishes principles for effective regulation of short selling, 19 June 2009