Australian Gov't Releases Draft Laws on Short Selling

The Australian government released draft laws on Tuesday that will require future covered short sale transactions on financial markets to be disclosed.

Financial regulators put a total ban on short selling on Monday for a four week period in an attempt to curb market volatility caused by the global financial market crisis.

As we have always said, the government has no intention on putting in place a permanent legislative ban on legitimate covered short selling, which in normal conditions can add to the efficient operation of the market, Minister for Superannuation and Corporate Law Senator Nick Sherry said in a statement, adding the Reserve Bank supports this position.

He said the country's key regulators have taken independent and prudent action, driven by quickly evolving international conditions and global cooperation between key regulators, to temporarily halt short selling.

The regulators have taken these steps because the last fortnight has seen great volatility in market conditions, he said.

They have assessed the situation and decided short selling, sometimes a mechanism for manipulation, was not currently in the interests of the Australian market.

He said when conditions calm, the Australian Securities and Investment Commission (ASIC) would assess the situation and may determine that it was appropriate to remove the current halt.

The government is taking the responsible step today of preparing for that outcome, with the release of a comprehensive covered short selling disclosure regime, he said.

Source: CRIEnglish