This week the Australian government continued its regulatory push to reduce volatility in its financial markets by proposing new legislation that would permanently restrict naked short selling and require covered short sales to be adequately disclosed to the market. Senator Nick Sherry, Minister for Superannuation and Corporate Law, said "there are no easy solutions or quick fixes to the global financial crisis, but we are taking decisive action to protect our markets, especially from trading practices that may involve manipulation or abuses. We've conducted an extensive consultation with industry, the Australian Stock Exchange (ASX) and the regulator Australian Securities and Investments Commission (ASIC), and the final Bill includes some important changes from the Exposure Draft that will ensure we have total transparency in the use of covered short selling." The legislation is expected to pass by year end.
The Australian Securities and Investment Commission had previously imposed a temporary ban on short selling in September, following the lead of the U.K. and U.S. The Australian ban is set to expire on November 19. A ban on short selling of financial stocks will continue until January 27, 2009.