ASIC extends short selling ban
(28 January 2009 – Australia) Australian Securities and Investments Commission has extended the ban on covered short selling of financial securities until 6 March.
The extension coincides with renewed volatility in the value of Australian bank shares following substantial declines in the US and in the UK where banks shares are exposed to short sellers.
Last year US regulators imposed a temporary ban on short selling which ended on 8 October 2008. The Financial Services Authority in the UK introduced a similar short selling ban which was lifted on 16 January – just days before the bank stocks hit turbulence.
ASIC said that it is unclear to what extent the removal of the short selling ban in the UK had contributed to the latest market volatility there. However, it had decided that an extension to the ban in Australia was warranted until ASIC has had further time to assess the likely impact of short selling on the activity in the domestic market.
This is the second time ASIC has extended the ban on financial stocks. It was originally introduced on 21 September 2008 amid concerns that the credit crisis might spark excessive selling of financial stocks leading to unwarranted price fluctuations.
A statement from ASIC said that the freeze on short selling of financial shares remains under review and that it may end earlier if ASIC finds there is sufficient information to justify lifting the ban.
Last year US regulators imposed a temporary ban on short selling which ended on 8 October 2008. The Financial Services Authority in the UK introduced a similar short selling ban which was lifted on 16 January – just days before the bank stocks hit turbulence.
ASIC said that it is unclear to what extent the removal of the short selling ban in the UK had contributed to the latest market volatility there. However, it had decided that an extension to the ban in Australia was warranted until ASIC has had further time to assess the likely impact of short selling on the activity in the domestic market.
This is the second time ASIC has extended the ban on financial stocks. It was originally introduced on 21 September 2008 amid concerns that the credit crisis might spark excessive selling of financial stocks leading to unwarranted price fluctuations.
A statement from ASIC said that the freeze on short selling of financial shares remains under review and that it may end earlier if ASIC finds there is sufficient information to justify lifting the ban.
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