Zero Plus Tick Rule: 2025 Guide for ASX Investors

The Zero Plus Tick is a trading rule historically designed to regulate short selling—where investors sell shares they don’t own, hoping to buy them back at a lower price. Specifically, the rule only permits short sales if the trade occurs at a price higher than the last different price (the 'tick'), or at the same price as the last trade if that trade was itself an uptick. In practical terms, this is meant to prevent short sellers from driving a stock's price downward in a rapid, destabilizing fashion.

• Zero Tick: A trade executed at the same price as the previous trade.

• Plus Tick: A trade executed at a price higher than the previous trade.

• Zero Plus Tick: A trade at the same price as the previous, which itself was a plus tick.

On the ASX, this rule has evolved in line with global market best practices and technology upgrades. While Australia’s approach to short selling is more permissive than in the US (which eliminated the 'uptick' rule in 2007), the Zero Plus Tick remains a reference point for compliance and algorithmic trading systems.

As part of its 2025 market structure reforms, the ASX has rolled out several digital enhancements and updated short sale reporting requirements. Notably:

• Real-Time Reporting: As of March 2025, the ASX now requires all short sale trades to be flagged and reported in real time, increasing transparency for all market participants.

• Automated Tick Compliance: Major trading platforms have integrated logic to automatically check for Zero Plus Tick compliance before allowing a short sale order to execute, reducing human error.

• Enhanced Surveillance: Regulators have stepped up oversight, using AI-driven analytics to identify patterns of market manipulation linked to improper short selling or tick rule breaches.

These updates reflect the ASX's commitment to market integrity, particularly as high-frequency and algorithmic trading become more prevalent on Australian exchanges. For retail investors, it means a more level playing field and greater confidence that short selling is being conducted within fair parameters.

While some markets have abandoned uptick rules, the Zero Plus Tick remains relevant in Australia for several reasons:

• Market Stability: By preventing short sellers from hitting the bid repeatedly on a falling stock, the rule helps cushion sudden price drops and dampen volatility.

• Investor Protection: The rule curbs predatory trading strategies that can unfairly disadvantage retail investors or trigger panic selling during sharp downturns.

• Algorithmic Trading Compliance: With most trades now executed by algorithms, built-in tick rule logic ensures compliance is seamless and automatic.

For example, during the February 2025 tech sector correction, strict adherence to tick rules prevented several mid-cap stocks from spiralling lower due to aggressive short selling, buying time for natural buyers to re-enter the market.

• Check Platform Settings: Ensure your trading platform automatically enforces tick rules for short sales. Most ASX brokers now do, but it’s worth confirming.

  • Monitor Real-Time Data: Use live market data feeds to track last trade prices and tick directions if you’re executing short sales manually.

  • Stay Informed: Keep up to date with ASX announcements and periodic regulatory updates, as compliance requirements can shift quickly.

Ultimately, the Zero Plus Tick rule is more than a technicality; it’s a key component of Australia’s broader market integrity framework. Whether you’re trading actively or investing for the long term, understanding how this rule shapes short selling and market behaviour can help you navigate the ASX with greater confidence.