A Securities and Futures Commission consultation on short-selling and stock-borrowing rules is likely to lead to the stringent regulations being relaxed, according to analysts.
The consultation on the rules, introduced after Government stock market intervention in 1998, was announced yesterday by SFC chairman Andrew Sheng.
'We need to review both the strengths and weaknesses of the rules,' Mr Sheng said.
He said they should be in line with global regulations.
The move follows remarks by Financial Secretary Antony Leung Kam-chung in a newspaper report on Monday that the Government could relax some of the 1998 rules.
The short-selling regulation made it illegal for investors not to report the practice. It also required investors to enter borrowing agreements before short selling.
The Government also requested the stock exchange to strictly reinforce its 'up-tick' rule for short selling, which prohibited speculators from exacerbating market falls by short selling below the current best price.