Interview with Sally Crane, managing director of Linedata Asia Pacific – Following the decision by Hong Kong’s financial regulator, the Securities & Futures Commission (SFC), to tighten its short-selling regime, fund managers trading short positions in Hong Kong-listed securities are required, as of 18 June 2012, to report to the SFC on a weekly basis.
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Linedata has responded to this regime change by developing a reporting solution in Linedata Beauchamp, the firm’s PMS product.
“The SFC started a pilot test at the beginning of May. A high proportion of clients are using our reporting solution; the results have been 100% successful so far,” confirms Sally Crane, managing director of Linedata Asia Pacific.
“Previously, under Part XV SFO which deals with disclosure of interest, managers had to report to the SFC if they held 1% of issued share capital. Under the new rules, this has been lowered to 0.02%, and clients will have to check their short positions to see if they meet this threshold and report accordingly.”
Linedata’s solution is two-fold, providing clients with a standard short report that contains exactly what the SFC requires, and a more granular report.
“To enable the client to be fully transparent the detailed report will contain all the information they need to justify their positions,” explains Crane.
The updated list of eligible short stocks will be issued on Friday 22 June. Managers will then be required to upload their initial report the following Tuesday. The pilot exercise being run on the SFC website is to enable clients to register themselves, and their company funds. This is essential as it will generate each client with a Short Position Reporting ID and fund name description.
“These two pieces of information will be used in our system when generating the reports. We will then schedule the reports to run automatically on a weekly basis. Our clients will be required to upload the standard report onto the SFC website in a CSV format after they’ve entered their SPR ID, following which they’ll receive email confirmation from the SFC.
“From a client’s perspective it’s so much easier and more reliable to get this data from their central data repository (such as Linedata Beauchamp) than having to manually compile the report themselves,” says Crane.
The standard report will contain three key data points: whether a stock is on the short selling list and needs to be reported; whether the position is equivalent to HKD30million, or whether it’s equivalent to 0.02% of share capital. The detailed report, purely for the clients’ benefit, allows clients to see all the short positions they have in the system and the information underpinning each criterion.
“For example, it’ll show the price we’re using for a stock, what position a client is holding in that stock, its market value in HKD. On the 0.02% criterion we’ll tell them the number of outstanding shares that we are downloading in the system. Also, when a clients adds a new short position it’ll automatically be configured in the system and subsequently reflected in the report,” adds Crane.
“What we recommend to clients is that they get both reports scheduled into their mailbox. They can then open the detailed report, check whether all the prices are correct, the number of shares are correct, check the up-to-date short stock list, and once everything’s verified they simply upload the standard CSV report to the SFC website.
“Linedata aims to make the process as streamlined and resource-efficient as we can.”
Sally Crane is managing director of Linedata Asia Pacific
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