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From the Opalesque team: Australia’s Hatfield Liptak Advisors’ very latest newsletter gave a perspective from down under on the effect of the short-selling ban. An Australian study showed that one of the consequences had been significant decreases in stock market liquidity, as measured by stock turnover, spread and trade frequency. Some local hedge fund managers reported they had been circumventing the ban by using other instruments (such as derivatives) to obtain the same economics as short selling. And investors have been exiting funds for cash deposits, which has led to dire consequences. Read all about it:

“The total ban on short selling has been extended to November 18 and the ban on financials until January 27. As Alan Kohler recently said “I think we can safely conclude that the ban on short selling in Australia has made absolutely no difference.”

Australian equity manager, Plato Investment Management released an informative study this month on the effect of ASIC’s short selling ban on the Australian stock market. Plato compared trading volumes before and after the ban’s introduction. It found significant decreases in stock market liquidity, as measured by stock turnover, spread and trade frequency. The authors estimate that the effect on the ban has been to have half of the largest state in Australia (New South Wales) on a extended bank holiday, with negative impacts for investors – slowing price discovery and incr......................

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