ASIC Ban On Short Selling

Effective 22 September 2008, ASIC has banned the short selling of securities (subject to a limited authorised market-maker exemption). ASIC's move has been made in response to announcements by overseas regulators including the US, the UK and now France, Germany, Switzerland, Ireland and Canada. The changes have been implemented by two new class orders and are effective immediately.

Background

Until now, subject to certain exemptions, section 1020B of the Corporations Act has banned the short selling of:

1. securities;
2. managed investments products;
3. debentures, stocks or bonds issued by a government; or
4. certain warrants;

unless the seller of the product "has a presently exercisable and unconditional right to vest the products in the buyer" (Covered Short Sale).