If the ASX does not follow the lead of the US and UK they are a complete joke.
This is from Bloomberg...
Short-Selling Crackdown Extends to New York, London (Update1)
By Michael Tsang
Sept. 18 (Bloomberg) -- Financial regulators in the U.S. and U.K., New York state's attorney general and the three largest U.S. pension funds are cracking down on short sellers in the wake of the collapse of Lehman Brothers Holdings Inc. and American International Group Inc.
Hedge funds and investors who profit from share declines are being scrutinized after a crisis of confidence in the financial industry erased almost $4 trillion from stocks globally this week. Goldman Sachs Group Inc. and Morgan Stanley, the only remaining independent securities firms on Wall Street, suffered the worst-ever declines yesterday. Morgan Stanley's chief executive officer, John Mack, said short sellers may be spreading false information and using abusive tactics to attack companies.
``You have to enforce the rules with regards to short selling,'' said Mario Gabelli, who oversees about $28 billion as chairman and chief executive officer of Gamco Investors Inc. ``Shorts were running amok.''
The U.S. Securities and Exchange Commission said it may require hedge funds to disclose short-sale positions, while the Financial Services Authority in the U.K. banned short selling financial shares for the rest of the year.
New York Attorney General Andrew Cuomo began an investigation into whether bears illegally drove down stock prices of financial firms. The California Public Employees' Retirement System and the New York State Common Retirement Fund decided to stop lending shares for short sales, after a similar move by the California State Teachers' Retirement System.
Stocks Rally
U.S. stocks rallied by the most in six years, with the Dow Jones Industrial Average jumping more than 400 points, on the initiatives and prospects the government is formulating a ``permanent'' plan to shore up financial markets.
Hedge funds and investors managing more than $100 million in securities would be ``required to promptly begin public reporting of their daily short positions,'' Chairman Christopher Cox said in a statement yesterday. The proposed disclosure is in addition to three SEC rules that took effect today aimed at reducing manipulative trades betting on a drop in share prices.
``It's a reflection of the view that disclosure is the best disinfectant,'' said Barry Barbash, a partner at Willkie Farr & Gallagher LLP in Washington, who previously headed the SEC division that oversees investment funds. ``If a person needs to disclose an abusive practice, it's likely the person is going to stop engaging in the practice.''
Martin Act
Short sellers try to profit by betting stock prices will fall. In a short sale, traders borrow shares from their broker that they then sell. If the price drops, they buy back the stock, return it to their broker and pocket the difference.
Cuomo said he'll use the state securities-fraud law, the Martin Act, to pursue investors for illegal sales. The law permits criminal and civil actions.
``The federal government has been ineffective when it comes to regulating these markets,'' Cuomo said in a conference call today. ``We want to stabilize the market. The market needs stability now.''
In a memo to employees, Morgan Stanley's Mack, 63, lambasted short sellers for allegedly pushing his firm's shares lower and said the management committee is ``taking every step possible to stop this irresponsible action in the market.''
``There is no rational basis for the movements in our stock,'' wrote Mack, who added that he contacted Cox and Treasury Secretary Henry Paulson. ``We're in the midst of a market controlled by fear and rumors, and short sellers are driving our stock down.''
Morgan Stanley, Goldman
Morgan Stanley shares advanced for the first time in eight days today, gaining 3.7 percent to $22.55 after earlier falling as much as 46 percent. Goldman slid for an eighth day, dropping 5.7 percent to $108 after losing 25 percent at midday. The stocks declined more than a third over the eight-day stretch.
Wachovia Corp., which is discussing a possible combination with Morgan Stanley, jumped more than 50 percent in New York after U.K. regulators banned short sales on banks and brokerages. Wachovia rose as much as 64 percent, leading gains in the 24- company KBW Bank Index. Nineteen other financial companies in the index, including Regions Financial Corp. and National City Corp., jumped more than 10 percent.
The measure in the U.K. was introduced after politicians and some investors blamed short-sellers for HBOS Plc's plunge before it agreed to a 10.4 billion-pound ($18.9 billion) takeover by Lloyds TSB Group Plc.
The FSA will also require daily disclosure of existing short positions in financial companies of more than 0.25 percent, the London-based regulator said in a statement today. The rules will remain in effect until Jan. 16.
``Government regulators are stepping in and saying, `This needs to come to a stop and this is how we're going to fix it,''' said Kelli Hill, a money manager at Ashfield Capital Partners in San Francisco, which oversees $4 billion. ``This is the thing the market needed.''
(20min delay)