From "The Australian" website: THE corporate regulator will extend the stock shorting ban on financial stocks, given the crisis unfolding in the global banking sector. Short sell ban extended
ASIC regulation remains tight on short selling. The Australian Securities Investment Commission has revealed that the ban, which was due to lift next Tuesday, will remain in place until March 6.
The decision comes after intense lobbying by the banks and industry groups that financial stocks would be hammered once the ban was taken off.
The banks have been targeted by hedge fund managers in the past year, as their share prices have swung wildly.
In a statement, ASIC said it had not been able to monitor the effect on the British banks and financial stocks after the UK ban on shorting was lifted on Friday.
In the first London trading session, shares in the major banks were punished, but it came at the same time as Royal Bank of Scotland recorded the largest loss ever in British corporate history.
“ASIC, however, noted the recent increase in volatility in financial stocks in overseas markets,’’ a statement from the Australian regulator said.
“ASIC is not at this stage in a position to assess if the resumption of short selling in the UK was coincidental or contributed to this volatility and if so, to what extent.
“As many factors are at play in these overseas markets, ASIC needs time to examine these latest developments.’’
The decision reverses the initial expectation that ASIC was keen to have the ban lifted on Tuesday.
However, The major decision makers at ASIC – chairman Tony D’Aloisio and commissioners Belinda Gibson and Jeremy Cooper – were understood to have been concerned about the risks to the financial system instability around the world at moment.
“ASIC will therefore, over the next few weeks, assess the markets more carefully to determine the role of short selling and aggressive or predatory practices and whether there are similar risks for Australia when the ban is lifted.
“ASIC believes that in the context of the renewed volatility affecting banking stocks in many markets, including the UK and USA, this cautious approach is warranted…that any possible loss of market efficiency or price discovery as a result of this additional short period of review is therefore justified, “ the statement said.
