ASIC extends ban on covered short selling of financial securities

Australian Securities and Investments Commission (ASIC) has announced that it would keep the ban on covered short selling of financial securities in place until 31 May 2009 but will keep this position under review.

ASIC advised the market on 21 January 2009 that the current ban on short selling of financial securities would remain in place until 6 March 2009.

In making its judgement to again extend the ban, ASIC weighed up 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 has decided to continue with its cautious approach and keep the ban in place; its judgement continues to be that any possible loss of market efficiency or price discovery as the result of the continuation of the ban is justified given the current market circumstances.

ASIC will monitor the operation of the ban and will not hesitate to act if it finds conduct which seeks to circumvent the operation of the ban on short selling of financial securities.

Key Details

• 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.

10 March, 2009