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News.com.au – An independent monitor of local hedge funds has rubbished claims domestic financial stocks would be targerted if the ban on short selling was lifted.
Australian Fund Monitors’ chief executive Chris Gosselin hosed down concerns expressed by the Australian Securities and Investments Commission (ASIC) to extend the short selling ban on financial stocks for a third time until May 31.
The risk of damage from aggressive or predatory practices from short selling justified any loss of market efficiency or price discovery caused by extending the ban, ASIC said last Thursday.
New York (HedgeCo.Net) – Australian regulators have extended the ban on short-selling, saying the move was in the “national interest” of the country.
As large national banks prepare to release their profits in the wake of more write-downs and rising debt, regulators wanted to avoid the effects that short-selling by aggressive hedge funds would have on the market.
"We welcome any additional steps that further boost stability in these difficult conditions," said Senator Nick Sherry. "This is a decision made firmly in the national interest and regardless of any sectoral interests."
The Alternative Investment Management Association was disappointed with the decision, saying the ban reduces liquidity in the market. Both the Federal Government and the Australian Bankers Association agreed with the extension of the ban, while others disagree with the reasons outlined by the regulators.
The Australian Securities and Investment Commission said they would “not hesitate to act” should it be discovered that individuals or companies were skirting the ban.
The ASIC originally enacted the ban last September amidst the market collapse and crumbling financial institutions. The United States and Great Britain enacted bans on short-selling as well, which were lifted shortly thereafter.
The Australian government said they are hoping to lift the ban eventually, after the completion of their new short-selling disclosure requirements.
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The Australian – After suffering one of the worst years on record, Australia’s $62 billion hedge fund industry is bracing for even tougher times in 2009 as a confluence of factors works against them, including poor performance, more regulation, further short-selling bans, and a flood of redemption requests in late 2008 that are due to be repaid right about now.
The result is that an unprecedented level of cash is being pulled out of hedge funds and funds-of-hedge-funds by investors this quarter, just as they face millions of dollars of losses from the ban on short selling.
It is no surprise, then, that a lot of lobbying is going on behind the scenes to ensure that corporate watchdog ASIC lifts the ban on short selling financial stocks on January 27.
But speculation is running hot that the ban will be rolled over and some believe it could remain until the credit crisis subsides — a move hedge funds can ill afford.
In Britain, the ban is due to be lifted on January 17, but Andrew Baker, deputy chief executive of the Alternative Investment Management Association, recently said the ban could last for the entire length of the financial crisis.
ninemsn – The corporations watchdog has extended a ban on covered short selling in the local equities market by at least another month because market conditions continue to be difficult.
But a group representing hedge funds, which are high volume users of the short selling trading technique, has condemned the move, saying it could lead to job losses.
The Australian Securities and Investments Commission (ASIC) imposed the ban on September 21, as financial markets were racked by volatility and regulators began to look for ways to reduce wild swing in certain shares and the wider market.
ASIC chairman Tony D’Aloisio said on Tuesday that various actions and packages adopted by the Australian and other world governments to address the global financial crisis were yet to work through the system.
