ASIC extends ban on short selling Financial Stocks

In a statement, ASIC said it had not been able to monitor the effect on the British banks and financial stocks after the UK ban on shorting was lifted on Friday.

In the first London trading session, shares in the major banks were punished, but it came at the same time as Royal Bank of Scotland recorded the largest loss ever in British corporate history.

“ASIC, however, noted the recent increase in volatility in financial stocks in overseas markets,’’ a statement from the Australian regulator said.

“ASIC is not at this stage in a position to assess if the resumption of short selling in the UK was coincidental or contributed to this volatility and if so, to what extent.

“As many factors are at play in these overseas markets, ASIC needs time to examine these latest developments.’’

The decision reverses the initial expectation that ASIC was keen to have the ban lifted on Tuesday.

However, The major decision makers at ASIC – chairman Tony D’Aloisio and commissioners Belinda Gibson and Jeremy Cooper – were understood to have been concerned about the risks to the financial system instability around the world at moment.

“ASIC will therefore, over the next few weeks, assess the markets more carefully to determine the role of short selling and aggressive or predatory practices and whether there are similar risks for Australia when the ban is lifted.

“ASIC believes that in the context of the renewed volatility affecting banking stocks in many markets, including the UK and USA, this cautious approach is warranted…that any possible loss of market efficiency or price discovery as a result of this additional short period of review is therefore justified, “ the statement said.

The following securities provides a complete list (as of the 14th November 2008) of the securities for which the ban on covered short selling will continue until at least 6th of March 2009
ABP Abacus Property Group
AMP AMP Ltd
ASX ASX Ltd
ALZ Australand Property Group
ANZ Australia & New Zealand Banking Group Lt
AUW Australian Wealth Management Ltd
AXA AXA Asia Pacific Holdings Ltd
BCM Babcock & Brown Capital Ltd
BJT Babcock & Brown Japan Property Trust
BNB Babcock & Brown Ltd
BOQ Bank of Queensland Ltd
BEN Bendigo and Adelaide Bank Ltd
BWP Bunnings Warehouse Property Trust
CER Centro Retail Group
CFX CFS Retail Property Trust
CGF Challenger Financial Services Group Ltd
CBA Commonwealth Bank of Australia
CPA Commonwealth Property Office Fund
DXS Dexus Property Group
FKP FKP Property Group
GMG Goodman Group
GPT GPT Group
HGG Henderson Group PLC
HFA HFA Holdings Ltd
IIF ING Industrial Fund
IOF ING Office Fund
IAG Insurance Australia Group Ltd
IFL IOOF Holdings Ltd
LLC Lend Lease Corp Ltd
MCW Macquarie CountryWide Trust
MDT Macquarie DDR Trust
MQG Macquarie Group Ltd
MOF Macquarie Office Trust
MGR Mirvac Group
NAB National Australia Bank Ltd
PPT Perpetual Ltd
PTM Platinum Asset Management Ltd
QBE QBE Insurance Group Ltd
SGB St George Bank Ltd
SGP Stockland
SUN Suncorp-Metway Ltd
SDG Sunland Group Ltd
TSO Tishman Speyer Office Fund
TAL Tower Australia Group Ltd
VPG Valad Property Group
WDC Westfield Group
WBC Westpac Banking Corp

Five additional Securities (being APRA regulated businesses)
WES Wesfarmers Limited
ROK The Rock Building Society Limited
WBB Wide Bay Australia Ltd
FCL Futuris Corporation Limited
CIX Calliden Group Limited