Swing Trading definition outback definition
In a new definition published by the Australian Securities and Investments Commission, swing trading is the trading of shares or options to buy or sell shares on the basis that they are expected to fluctuate in value.
This is not something that can be done on the spot, the definition states, but rather trades that occur on a “regular basis” that is “generally considered to be a swing trading activity”.
This can include the purchase and sale of shares on behalf of another person.
The definition does not explicitly state that a person must have bought or sold an option, but it is implied.
If an investor is in a swing position, they can also have the option traded for them.
“An investor who is actively engaged in a trade in the swing market, and who is in possession of options on a swing market or who has purchased or sold options on behalf the investor in the trade, must not have a position in that trade.”
In its submission, the ABC argued that the definition was “too broad” because it covers “any transaction involving a share, option or other form of transfer or delivery of shares”.
The definition also contains “broad and vague terms of trade”.
The ABC also said that the term “share” in the definition is “not defined in the regulations” and is used to include “any share issued by a company”.
The regulator argued that, for example, if an option on a share was to expire, it would be treated as an option trade and not a swing trade.
The ABC argues that the current definition of swing trading “does not adequately protect investors from a significant risk of a sudden downturn in the value of their options”.
On the ABC’s Morning Report program on Wednesday, the commission argued that there were two distinct definitions of swing and that the ABC should “apply” the definition it has.
“It is not possible to be more specific in the way you use those terms, which is a key part of what the regulator is saying is a requirement that you apply this term in the law,” Acting Commissioner Andrew Lloyd said.
The definition has been accepted by the ABC and will be considered in the court, which could be as early as next week.