Financials short selling ban extended

The Australian Securities and Investments Commission has extended its ban on the short selling of financial stocks by almost three months, despite advice from international regulators that the ban distorted the market and should only be used on a temporary basis.

With the ban due to expire tomorrow, ASIC said on Thursday it would keep the regime in place until May 31, but its position was under review.

ASIC said the decision to extend the ban for a third time was based on ongoing market volatility. In recent days, the Australian sharemarket has dropped to five-and-a-half year lows and the trading of some financial sector stocks, such as investment bank Macquarie Group Ltd, has been especially volatile, over the perception the companies are in some sort of funding distress.

ASIC first introduced the ban in the third week of September 2008 amid the great turbulence in equity and credit markets following the failure of Lehman Brothers. ASIC extended the ban once already this year.

Business Spectator