Oct. 2 (Bloomberg) -- Australia will require short-sale positions to be disclosed to the nation’s market regulator from April, according to draft rules released today by the Minister for Financial Services, Superannuation and Corporate Law.

Short sellers will have to report their positions to the Australian Securities and Investments Commission, according to an e-mailed press release today from Minister Chris Bowen’s office. Previously, only orders needed to be reported, making it difficult to know what short positions were eventually taken.

“This regime will give people the first complete overview of short selling in Australia,” Bowen said in the statement. The reporting of short positions “will be aggregated by ASIC and released to the public four business days after the positions are taken,” the release said.

The government will review the regulations 12 months after they take effect, it said. In short selling, traders borrow shares from a broker that they then sell. If the price drops, they buy back the stock, return it to the broker and pocket the difference.

ASIC banned short selling in September 2008 as part of international efforts to contain stock market declines after the collapse of New York-based Lehman Brothers Holdings Inc. ASIC Chairman Tony D’Aloisio said in August this year that markets globally would have to be more heavily regulated in the wake of the global financial crisis.

“The regulations strike the right balance between the market’s interest in knowing what short selling is occurring and the legitimate interests of businesses in not having trading strategies compromised,” Bowen said in the statement.

The Investment and Financial Services Association, Australia’s mutual-fund trade group, which has been calling for better disclosure of short selling, welcomed the draft regulation, calling it “sensible and workable.”

Australia’s benchmark S&P/ASX 200 Index fell 41 percent last year, its biggest decline on record, as the financial crisis tipped much of the world into recession and threatened the nation’s exports.

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.

Last Updated: October 1, 2009 23:13 EDT