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Alternative Market Briefing

Australia`s regulator extends ban on short selling of financial securities to May 31

Thursday, March 05, 2009

From Komfie Manalo, Opalesque Asia:

The Australian Securities and Investment Commission (ASIC) today (05-Mar-09) extended the ban on short selling of financial securities until 31-May-09. This is the third time ASIC has extended the ban, making it the only country, except for the Netherlands, to maintain a ban on covered short selling.

ASIC cited the continued volatility in global financial markets and potential damage from aggressive or predatory practices from short selling against the possible loss of some market efficiency or price discovery.

ASIC also advised it was remaining vigilant against activities that aim to circumvent the ban –presumably referring to the use of derivatives and arbitrage strategies, Australian Fund Monitor (AFM) said on its web site.

The regulator said it had conducted its own extensive research and had gathered input from other regulators and from a wide cross section of market participants before reaching its decision.

Key details of the ban include: covered short selling of financial securities will continue to be banned; covered short selling of non-financial securities remains unaffected and will still be permitted; the daily reporting of gross short sales will continue as will the publication to the market of aggregate short sales the day after trading; and ASIC requires strict compliance with the ban on naked short selling.

According to ASIC, short sales can be either ‘nak......................

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