Early Days of Short Selling
Short selling has existed in various forms for centuries, but modern regulated short selling on the ASX developed alongside the broader evolution of Australian securities markets in the 20th century.
The Global Financial Crisis (2008)
The GFC marked a turning point for short selling regulation worldwide. In September 2008, ASIC banned covered short selling of financial stocks amid concerns that shorts were exacerbating the market crisis.
Key changes following the GFC:
- Enhanced disclosure requirements for short positions
- Daily publication of aggregated short position data (from 2010)
- Stricter enforcement against naked short selling
- Improved transparency for retail investors
Modern ASIC Reporting (2010-Present)
Since 2010, market participants have been required to report significant short positions to ASIC. The introduction of daily T+4 reporting gave investors unprecedented visibility into market sentiment.
Notable ASX Short Squeezes
Mining Boom Squeezes
Several junior miners experienced dramatic short squeezes during commodity price rallies, with some stocks rising 100%+ as shorts rushed to cover.
COVID-19 Era (2020-2021)
The post-COVID market rally caught many shorts off-guard, particularly in travel, retail, and technology sectors. The rapid recovery led to significant short covering and squeeze events.
Current Regulatory Framework
Today's framework balances market efficiency with investor protection:
- Daily T+4 disclosure of aggregated short positions
- $100,000 or 0.01% reporting threshold
- Prohibition on naked short selling
- Securities lending arrangements required before shorting