ASIC Extends Conditional Short Selling Relief for Precious Metal-Linked Structured Products

The Australian Securities and Investments Commission (ASIC) has extended conditional short selling relief for appointed market makers involved in exchange-traded options (ETOs) over precious metal-linked structured products, including instruments tied to physical gold.

The amendment took effect on 3 February 2026 and updates ASIC Corporations (Short Selling) Instrument 2018/745 through Amendment Instrument 2026/24. The changes align the regulatory treatment of specified precious metal-backed structured products with existing relief available to exchange-traded fund (ETF) market makers, where settlement failure risk has historically been assessed as low.

ASIC said the adjustment is intended to support liquidity by allowing market makers to maintain continuous two-way pricing in relevant exchange-traded products without being constrained by technical short selling restrictions.

Scope Expanded to Gold-Linked Structured Products

Under the amended framework, appointed market makers of specified structured products referencing precious metals are permitted to conduct short selling when performing legitimate market making functions. The conditions mirror those already applied to ETF market makers.

The instrument also formally includes Global X Physical Gold Structured products issued by Global X as eligible instruments for hedging purposes. Appointed ETO market makers may short sell these products to manage exposures arising from listed options activity.

ASIC additionally extended covered short sale transaction reporting relief—previously applicable to ETF market makers—to include market makers of the specified structured products. The regulator noted that the underlying policy rationale remains unchanged, given the low historical settlement risk.

Technical Updates and Regulatory Consistency

The amendment introduces updated naming conventions for exchange-traded products and adopts market-neutral terminology to reflect evolving product structures. ASIC described these changes as largely technical but necessary to maintain regulatory consistency.

The regulator stated that firms intending to rely on the conditional exemption should review the amended instrument to ensure compliance. The relief applies strictly to market making activity and does not extend to speculative short selling.

Australia’s broader short selling regime continues to operate under the Corporations Act 2001 and related regulations, supported by existing regulatory guidance.

Liquidity Focus Amid Product Expansion

The update reflects ASIC’s ongoing approach of supporting liquidity in exchange-traded markets while maintaining safeguards around settlement and systemic risk. By harmonising exemptions across comparable product types, the regulator aims to reduce fragmentation as commodity-linked structured products continue to evolve.

The extension also highlights the role of market makers in maintaining orderly pricing and depth, particularly in precious metal-linked instruments that may experience increased demand during periods of market uncertainty.