short selling reforms too late for mfs and ocv, page-25

http://www.theaustralian.news.com.au/story/0,25197,24403257-30538,00.html

PART 2

Bryan Frith | September 26, 2008


"Where the ASX is open to legitimate criticism -- despite Newman's protestations to the contrary -- is in its oversight of short selling. It has long been the case that all brokers must report daily their net short-sold position to the ASX, which releases the list to maintain an informed market. But the reporting has tended to be confined to "naked" shorts, where the short seller has not borrowed stock and has to buy in the market to cover.

Most short selling involves covered shorts, where stock is borrowed to cover the sale, and they have not been reported because it is argued they are not legally short sales, as stock is available to cover the transaction. Therefore, the market has long been operating in the dark.

The ASX claimed recently that its rules required brokers to report both naked and covered shorts, and it's true that a rule was introduced in March 2004, and amended in November 2005, that reporting of net shorts includes instances of the seller having borrowed the securities, or entered into arrangements under which it could borrow, in order to cover.

That only exposes the ASX to greater criticism, as it has never done anything to try to police that requirement.

Then there's the stock lending model used by Tricom and the failed Opes Prime, which enabled unreported shorting of stocks that were not approved by the ASX, and to ignore the uptick rule, and the rule that limits shorting to 10 per cent of a company's capital. Opes Prime boasted of this ability on its website.

The ASX may have pushed for action in mid-2007, but it should have been doing so long before -- as should ASIC.

It took the collapse of Opes Prime to prompt any sense of urgency, and by then it was too late to prevent clients of the failed brokers from incurring heavy losses. "




IN PARTICULAR NOTE


"Then there's the stock lending model used by Tricom and the failed Opes Prime, which enabled unreported shorting of stocks that were not approved by the ASX, and to ignore the uptick rule, and the rule that limits shorting to 10 per cent of a company's capital. Opes Prime boasted of this ability on its website. "

ANZ announced months after the trading halt that it held
...from memory..a substantial shareholding of about 27 million ?MFS shares..no trading details known and no date of aquisition ?? NOT much known at all.imo