Bank shares back in traders hands
(26 May 2009 – Australia) A ban on short selling of shares of Australia’s bank’s and other financial institutions has been lifted, allowing the potential for added volatility in the Australian stock market.
The Australian Securities and Investment Commission (ASIC) said that it would lift the current ban on covered short selling of financial securities from 10am on 25 May 2009.
Covered short selling of securities was temporarily banned on 21 September 2008 because of circumstances of extreme market volatility amidst the global financial crisis.
ASIC lifted the ban on covered short selling of non-financial securities on 19 November and advised the market that the ban on short selling of financial securities would continue to the end of May 2009.
ASIC has been reviewing market conditions and considered that the balance between market efficiency and potential systemic concern has now moved in favour of the ban being lifted.
In reaching this view, however, ASIC notes that the global financial crisis and global recession continues to place pressure on Australia's markets.
ASIC said that it will not hesitate to reimpose the ban immediately and without consultation if it considers market conditions warrant such action.
ASIC will, in its monitoring of the market along with the ASX, pay particular attention to short selling activity by participants (including activity by hedge funds and similar institutions) which could potentially harm Australia's financial system.
UBS managing director and head of sales George Kanaan said that the lifting of the ban is welcome and it would allow the market value of the stocks to reflect the true value of the asset.
Covered short selling of securities was temporarily banned on 21 September 2008 because of circumstances of extreme market volatility amidst the global financial crisis.
ASIC lifted the ban on covered short selling of non-financial securities on 19 November and advised the market that the ban on short selling of financial securities would continue to the end of May 2009.
ASIC has been reviewing market conditions and considered that the balance between market efficiency and potential systemic concern has now moved in favour of the ban being lifted.
In reaching this view, however, ASIC notes that the global financial crisis and global recession continues to place pressure on Australia's markets.
ASIC said that it will not hesitate to reimpose the ban immediately and without consultation if it considers market conditions warrant such action.
ASIC will, in its monitoring of the market along with the ASX, pay particular attention to short selling activity by participants (including activity by hedge funds and similar institutions) which could potentially harm Australia's financial system.
UBS managing director and head of sales George Kanaan said that the lifting of the ban is welcome and it would allow the market value of the stocks to reflect the true value of the asset.
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