The Government has called for an overall review of the short-selling system to increase transparency and fairness, Secretary for Financial Services Rafael Hui Si-yan says.
Speaking at a Chinese General Chamber of Commerce seminar, Mr Hui said the Government had asked the Securities and Futures Commission (SFC) and the stock exchange to review the system.
The stock exchange allows more than 200 stocks to be sold short but those who sell short need to borrow stocks to cover their positions.
Mr Hui said large international firms had more avenues to borrow stock than local brokers and investors.
He said the unfairness of this situation would be resolved this year as the Hong Kong Clearing Co planned to launch the central securities borrowing and lending service which would allow small brokers and investors to borrow stock from the clearing house.
However, he said the transparency problem had not yet been resolved.
