What is an ASX Appendix 3Y notification and what does it mean?

Appendix 3Y is an Australian Stock Exchange (ASX) notification that relates to insider transactions. They are published by publicly-listed Australian companies whenever a company director buys or sells shares in their own company or is issued company shares.

In this guide, we look at the basics of Appendix 3Y notifications including how to read filings. We also explain how Appendix 3Y announcements can be used to generate investment ideas.

Appendix 3Y explained

In Australia, directors of publicly-listed companies must notify the Australian Stock Exchange whenever they buy or sell shares in their own company or are issued shares in their own company. The ASX requires these insiders to lodge an Appendix 3Y - Change of Director’s Interest Notice form within five business days of the transaction. The details of the insider transactions are then released to the market for transparency.

How can investors use Appendix 3Y announcements to their advantage?

Appendix 3Y announcements can help investors identify transactions that top corporate insiders such as CEOs, CFOs, and Chairmen have made in Australian publicly-listed companies.

This is valuable because corporate insiders have a genuine information advantage over other investors and a number of academic studies have found a link between insider transaction activity and future stock returns. As such, Appendix 3Y announcements can potentially be used to generate investment ideas.

As a general rule, Appendix 3Y announcements that show significant director buying activity are a bullish signal. If corporate insiders are buying, it shows that they are confident about the future and expect the company’s share price to rise.

Appendix 3Y announcements that show that insiders have been selling stock are a little more difficult to interpret. This is because there are a number of reasons that insiders sell stock that have nothing to do with the company’s future prospects. For example, an insider may simply wish to diversify their investments. Announcements that show large director sales should not be ignored, however, as in some situations, it can be an indication that insiders are offloading their stock in the expectation that the stock will soon fall.

Where can investors find Appendix 3Y data?

There are a number of ways to gain access to Appendix 3Y data.

The first way is to monitor the announcements of individual companies. When a company director has bought or sold shares, or been issued stock, the company will release an announcement entitled ‘Appendix 3Y’ or ‘Change of Director’s Interest Notice.’

The second way is to monitor announcements on the Australian Stock Exchange website. All Appendix 3Y filings are published here.

The third way is to monitor websites that provide director transaction feeds. These websites provide aggregated data, however, the data is generally in very basic form.

The fourth, and easiest way, to track Appendix 3Y data is to subscribe to an insider transaction data provider such as 2iQ Research. 2iQ provides access to the most complete and accurate insider transactions data set in the industry, listing director dealings data for 60,000 stocks across more than 50 countries.

How to read an Appendix 3Y form

Appendix 3Y forms are easy to read.

Below is an example of an Appendix 3Y notification issued by Westpac Banking Corporation (WBC:AU) on 31 July 2020 and a breakdown of this filing. 

  • The first part of the Appendix 3Y form details the name of the entity, its Australian Business Number (ABN), and the date of the announcement. In this case, the security was Westpac Banking Corporation and the date of the announcement was 31 July 2020.
  • Next, we have the name of the director that made the transaction, as well as the date of their last notice. In this case, the director was Peter King, the CEO.
  • Part 1 lists the details of the transaction. Here, we can see that King acquired 13,299 WBC shares on 27 July 2020.
  • We can also see that prior to the transaction, the insider held 40,587 shares. After this transaction, he holds 53,886 shares.

  • The section ‘Nature of change’ provides details of the transaction. In this case, we can see that these shares were granted under a Restricted Share Plan.
  • Section 1 also shows the insider’s rights holdings, as well as his indirect holdings that are owned through his trust.
  • Part 2 is related to disclosures associated with companies. This section has been left blank.
  • Part 3 is related to the timing of the transaction. If directors acquire or dispose of shares within a ‘closed period’, they are required to fill in this section. In this case, the shares were not acquired within a closed period.

Appendix 3Y summary

Appendix 3Y announcements relate to director dealings in Australian publicly-listed companies. Appendix 3Y notifications can potentially be used to generate investment ideas.

There are a number of ways to gain access to Appendix 3Y data. The easiest way is through a data provider that provides access to an insider transaction database.

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