ASIC arenow well and truly in the driver’s seat as regulator of the Australian share market. Given this, one would expect that all remaining road blocks ensuring a fair and transparent market place have been removed. However, I believe there are some areas that still deserve closer scrutiny. One area of particular importance for ordinary investors is for a greater degree of disclosure from market participants around short selling, especially in a bear market.
Few would argue that for a market to be truly transparent all transactions must be reported and this would even include those created and then closed out on the same day. Reporting this way ensures the public are fully informed about the dealings on or off market that could affect their investments.
Currently, as is disclosed on the ASIC website there is no responsibility on the part of ASIC to ensure that all transactions are reported by market participants, or institutions, carrying out short selling activity. Given this, how can the public be confident that the data collected is true and correct? Further tothis, why collect data at all if it is not a true account of market activity? For a change to occur, ASIC needs support from the Australian government, but then the question would remain whether institutions would support the change given they are the biggest participants in lending stock for short selling.
What do we expect in the market?
The Australian share market made a strong start to the week on Monday with a gain of around 80 points, however, conditions quickly deteriorated as news emerged that Europe seems no closer to reaching a decision on the debt crisis. This saw the All Ordinaries index wipe out Monday’s gains before sliding lower for the rest of the week to break support at the 4200 point level. Asthis occurred a lot of short term traders were stopped out of their positions as they attempted to speculate that the resolution would further lift the market.
From here it is probable for the Australian share market to find support at around 4100 points, a critical level that if heldcould provide a launching pad for the next rise to around 4500 points. If the market does find support here before breaking back above 4300 points the probability of a further rise increases, and this would give us a target between 4450 to 4500 points. Alternatively, if the market were to decline back below the 4000 point level the balance will shift back in favour of the bears and therefore further falls would be expected.