Part of an article in the Australian today.Australia’s biggest...

Part of an article in the Australian today.

Australia’s biggest superannuation funds are considering joining a move to institute an informal ban on short selling to protect investment returns on retirement savings after regulators decided against a repeat of a similar block on short selling introduced during the global financial crisis.

One of Australia’s largest superannuation funds, the $85bn UniSuper fund, on Monday pulled the pin on lending its stock to short sellers in a bid to limit price plunges on equities markets in a move that could encourage other pension funds to join its “unilateral” decision. It also demanded any stock it had lent out in the market be returned immediately.

The $60bn REST Super fund confirmed its securities lending program was under “constant review”, while AMP superannuation also said its share lending arrangements were under review.“REST has a securities lending program that is run through State Street,” a spokeswoman said. “We believe in active investment, so all of our programs — including our securities lending program — are under constant review.”

UniSuper, which manages the savings of university staff members, told its custodian, BNP Paribas Securities Services, to suspend its stock lending program effective immediately and to recall all shares currently out on loan “without exception”.UniSuper also encouraged other large super funds to consider stopping lending shares out to investors that bet prices would fall.

While the Australian Securities & Investments Commission has no plans to revisit the ban on short selling, UniSuper said any effect on the local sharemarket would depend on “how many funds follow a similar path”.