Australia Bans Short Selling

Discussion in 'Trading' started by mxjones, Sep 21, 2008.

  1. mxjones


    All short selling, not just Financials.

    SYDNEY -- The Australian Securities and Investments Commission Sunday banned covered short selling of all listed shares following moves by other countries to ban short selling of financial stocks.

    In a rapid escalation of the clampdown on short selling, ASIC said in a statement that it had decided to ban covered short selling from the start of trading Monday because a number of countries had banned covered short selling of financial stocks and there was a risk that if Australia didn't follow with its own ban that there would be a risk of "unwarranted activity" in the Australian market.

    "These measures are necessary to maintain fair and orderly markets in these exceptional times of global crises of confidence in financial markets," ASIC Chairman Tony D'Aloisio said in a statement.

    "Because of the relatively small size and the structure of the Australian market, it is necessary to extend the prohibition to all stocks," he said. "To limit the prohibition to financial stocks, as has been done in the U.K., could subject our other stocks to unwarranted attack given the unknown amount of global money that may be looking for short-sell plays."

    ASIC late Friday said it would ban naked short selling. It had also tightened rules on covered short selling but still permitted it to occur. That announcement Friday has now been superseded.

    A naked short sale occurs when the seller doesn't have an agreement in place to borrow the shares that it has sold. A covered sale is when the seller has a binding stock lending agreement in place.

    "Since that (Friday) announcement, ASIC has continued to assess moves by other international regulators," it said. "The U.S. and the U.K. moved late last week to ban covered short sales in financial stocks. Countries that have now followed are France, Germany, Switzerland, Ireland and Canada (Ontario), and other regulators are assessing their responses."

    ASIC said that there would be a limited exemption of the ban on covered short selling for market makers.

    It said it will reassess and advise the market in 30 days, whether or not it will at that time, or at a later date, reopen covered short sales for nonfinancial stocks. The ban on covered short sales for financial stocks will be reviewed in line with reviews by the U.S. and U.K.

    Treasurer Wayne Swan and Minister for Superannuation and Corporate Law Nick Sherry welcomed ASIC's ban.

    "The measures being taken by ASIC are an appropriate response to global financial market turbulence," Mr. Swan said. "They will help protect investors as well as the integrity of our financial markets."

    "The capacity for short selling to manipulate the market or to take advantage of the situation currently confronting global financial markets is of significant concern," Mr. Sherry said.
  2. Its always good to know that some fool will take it to the next level.
  3. mxjones


    You aren't kidding. I will not be shocked if the U.S. extends the ban on the Financials, and expands it to include other stocks.
  4. dont


    Fuck you have too wonder if these people believe in free markets, you have a little move down and they ban short selling, what are they gonna do when the market plummets 20% anyway, order asset managers to buy?
  5. dhpar


    this is becoming unreal.:confused:
  6. damn convicts are setting a bad precedent
  7. GG1972


    new addage

    "As wise as an Aussie" LOL
  8. d08


    And I was looking at the ASX for an alternative, what a joke this all is. That is what happens when politicians take action on something they know only because some manipulative advisor tells them to do so - they should just stick to giving speeches and shaking hands and not dabble in things they have only a vague idea about.
  9. Free markets is only when the individual investor is losing cash. If the I-banks like GS start to lose then the they change the rules.
  10. dhpar


    #10     Sep 21, 2008