Treasurer Wayne Swan and Senator Nick Sherry, Minister for Superannuation and Corporate Law, welcomed today’s announcement by the Australian Securities and Investment Commission (ASIC) of an interim ban on covered short selling of all Australian stocks.
ASIC’s action compliments the U.S. Securities and Exchange Commission supplementary Emergency Order on Friday night (AEST) to halt all short selling of financial stocks. Similar rulings have been put in place in other major jurisdictions including Germany, France, Ireland, Switzerland and Ontario.
In addition, ASIC’s measures today extend beyond the US and UK positions by halting covered short selling of all stocks on the Australian Securities Exchange. ASIC advises that this is necessary due to the relatively small size and structure of the Australian market, because to limit the prohibition to financial stocks could subject other Australian stocks to unwarranted attention.
“The measures being taken by ASIC are an appropriate response to global financial market turbulence. They will help protect investors as well as the integrity of our financial markets,” the Treasurer said.
“ASIC has been closely watching further developments over the weekend and is now taking further action to maximise global regulatory cooperation”, Minister Sherry said.
After 30 days ASIC will reassess its decision in relation to non-financial stocks to determine whether it will re-allow covered short sales. ASIC will also review the ban on covered short sales of financial stocks at the same time as the SEC, FSA and others reassess the same issue.
Today’s measures compliment the interim ban on naked short selling issued by ASIC on Friday.
“The capacity for short selling to manipulate the market or to take advantage of the situation currently confronting global financial markets is of significant concern,” Minister Sherry said.
The Government supports ASIC’s move and is advised by Treasury that ASIC has adequate powers under existing legislation to support today’s actions. Should any further legislative support be needed, the Government will introduce any supplementary legislative provisions that may be necessary to ensure that the measures are fully effective from 9.00am Monday 22 September.