ASIC threatens second short selling ban
24 September 2012 Canberra
Image: Shutterstock
Australian regulators has said that a new ban on short selling will be implemented if a situation similar to the global financial crisis reoccurs.
In a report released on the bans in late 2008 and 2009, ASIC assured that, despite increased compliance costs, reduced liquidity and increased price volatility, the benefits of the ban mostly outweighed the negatives.
“While these effects would normally run counter to our objectives, the review concludes that the exceptional circumstances at the time—a market that was under severe strain because of unprecedented global events—were justified in order to reduce the risk of greater market disorder,” said ASIC deputy chairman, Belinda Gibson.
The report went on to note that the new regime banning naked shorting and improving disclosure was working well, but reserved the right to re-introduce a more far-reaching ban.
In a report released on the bans in late 2008 and 2009, ASIC assured that, despite increased compliance costs, reduced liquidity and increased price volatility, the benefits of the ban mostly outweighed the negatives.
“While these effects would normally run counter to our objectives, the review concludes that the exceptional circumstances at the time—a market that was under severe strain because of unprecedented global events—were justified in order to reduce the risk of greater market disorder,” said ASIC deputy chairman, Belinda Gibson.
The report went on to note that the new regime banning naked shorting and improving disclosure was working well, but reserved the right to re-introduce a more far-reaching ban.
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