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http://www.asic.gov.au/ASIC/asic.ns...nds ban on covered short selling?opendocument
Another month. What a joke.
ASIC extends ban on covered short selling
- Thread starter captain black
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http://www.asic.gov.au/ASIC/asic.ns...nds ban on covered short selling?opendocument
Another month. What a joke.
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LOL. Read this and weep, Cap'n Black...
http://compareshares.com.au/show_news.php?id=S-545378
ASIC running scared? Do they fear a run on our banks and financial instos??
What a crock.
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It's thinking like this that exacerbates volatility, creating further fear in the market.
ASIC(bless 'em)said that they needed time to study the effects of the British(and God bless 'em)lift of short ban selling.Apparently,the people we have in charge shouldn't be in charge.Wonderful to know that such an important government agency can't make a decision.
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The financial institutions are more than capable of tanking without the aid of short sellers. I'm not of the view that short selling is particularly necessary in the market place but its certainly not a causal factor in the demise of these stocks.
IFocus
You are arguing with a Galah
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Going by the charts the banks are not listening to the shorting ban currently falling and looking very weak.
Who to blame next I wonder?
Who to blame next I wonder?
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Oh, but ALL IS WELL! See? The media tells us so....
http://www.news.com.au/business/story/0,23636,24946715-14334,00.html
*Phewww*
Thank god for ASIC, eh?
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Arnt they just delaying the inevitable?
By continually putting back the date for the ban to be lifted more and more people are becoming aware of the "fear" that surrounds the lifting of the ban. Active traders will surely be lining up to short the banks as soon as the ban is lifted because ASIC is basically promoting the fact that they will drop.
If ASIC are hoping conditions will change before the bans lifted there living in lala land.
By continually putting back the date for the ban to be lifted more and more people are becoming aware of the "fear" that surrounds the lifting of the ban. Active traders will surely be lining up to short the banks as soon as the ban is lifted because ASIC is basically promoting the fact that they will drop.
If ASIC are hoping conditions will change before the bans lifted there living in lala land.
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If they keep extending the bans (to save the banks who CANNOT and MUST NOT fail) until we grow old and die, maybe the later generations won't even know what happened? LOL
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ASIC extends ban on covered short selling of financial securities
Wednesday 21 January 2009
Below is the latest announcement from ASIC in regards to Short selling. ASIC has detailed its justification for retaining the ban, its effect on market price discovery and the importance that shorting would normally play in an efficient market.
It is clear that the fear from both ASIC and the financial industry to hold the ban on financial shorting has backed both parties into a corner. A sector with this kind of protection will lose investor interest, how can there be any confidence in the sector if both the regulator and industry participants are afraid of short selling. And what will be the effect once the ban is lifted?
ASIC Announcement:
09-05 ASIC extends ban on covered short selling of financial securities
ASIC today said it would keep the ban on covered short selling of financial securities in place until Friday, 6 March 2009.
ASIC advised the market on 13 November 2008 that the current ban on covered short selling of financial would remain in place until at least 27 January 2009.
This approach was consistent with many other jurisdictions, including the UK, where the Financial Services Authority (FSA) planned to lift its short selling ban on certain financial securities on 16 January 2009.
The FSA lifted its ban on 16 January 2009 and ASIC expected to then lift its ban, so as to be in line with the other major markets.
ASIC, however, noted the recent increase in volatility in financial stocks in overseas markets. 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. 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. ASIC believes that any possible loss of market efficiency or price discovery as a result of this additional short period of review is therefore justified.
ASIC’s decision to extend the ban on covered short selling of financial securities is also in the context of a legislative framework that recognises short selling as a legitimate mechanism of price discovery and liquidity, subject to disclosure and subject to intervention by ASIC in exceptional cases.
ASIC’s intention is and remains to keep its intervention to an absolute minimum. ASIC will continue its consultations with relevant stakeholders and other regulators in Australia and overseas.
ASIC will keep the position under review, and might decide it has sufficient information to be able to lift the ban earlier than 6 March, and will make a decision for 6 March closer to that date.
Publication of short selling data
ASIC’s current reporting and disclosure regime will continue pending the commencement of the Government's permanent measures. Continuing to require disclosure of covered short selling will reduce the potential for abusive behaviour and disorderly markets.
Stock lending
ASIC reminds market participants that borrowers must have a presently exercisable and unconditional right to vest securities for delivery at the time of a covered short sale. These arrangements must comply with section 1020B of the Corporations Act
Key details
1. Covered short selling of financial securities will continue to be banned;
2. Covered short selling of non-financial securities is unaffected and will still be permitted;
3. The daily reporting of gross short sales will continue as will the publication to the market of aggregate short sales by security the day after trading; and
4. ASIC requires strict compliance with the ban on naked short selling as outlined in RG196.
Wednesday 21 January 2009
Below is the latest announcement from ASIC in regards to Short selling. ASIC has detailed its justification for retaining the ban, its effect on market price discovery and the importance that shorting would normally play in an efficient market.
It is clear that the fear from both ASIC and the financial industry to hold the ban on financial shorting has backed both parties into a corner. A sector with this kind of protection will lose investor interest, how can there be any confidence in the sector if both the regulator and industry participants are afraid of short selling. And what will be the effect once the ban is lifted?
ASIC Announcement:
09-05 ASIC extends ban on covered short selling of financial securities
ASIC today said it would keep the ban on covered short selling of financial securities in place until Friday, 6 March 2009.
ASIC advised the market on 13 November 2008 that the current ban on covered short selling of financial would remain in place until at least 27 January 2009.
This approach was consistent with many other jurisdictions, including the UK, where the Financial Services Authority (FSA) planned to lift its short selling ban on certain financial securities on 16 January 2009.
The FSA lifted its ban on 16 January 2009 and ASIC expected to then lift its ban, so as to be in line with the other major markets.
ASIC, however, noted the recent increase in volatility in financial stocks in overseas markets. 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. 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. ASIC believes that any possible loss of market efficiency or price discovery as a result of this additional short period of review is therefore justified.
ASIC’s decision to extend the ban on covered short selling of financial securities is also in the context of a legislative framework that recognises short selling as a legitimate mechanism of price discovery and liquidity, subject to disclosure and subject to intervention by ASIC in exceptional cases.
ASIC’s intention is and remains to keep its intervention to an absolute minimum. ASIC will continue its consultations with relevant stakeholders and other regulators in Australia and overseas.
ASIC will keep the position under review, and might decide it has sufficient information to be able to lift the ban earlier than 6 March, and will make a decision for 6 March closer to that date.
Publication of short selling data
ASIC’s current reporting and disclosure regime will continue pending the commencement of the Government's permanent measures. Continuing to require disclosure of covered short selling will reduce the potential for abusive behaviour and disorderly markets.
Stock lending
ASIC reminds market participants that borrowers must have a presently exercisable and unconditional right to vest securities for delivery at the time of a covered short sale. These arrangements must comply with section 1020B of the Corporations Act
Key details
1. Covered short selling of financial securities will continue to be banned;
2. Covered short selling of non-financial securities is unaffected and will still be permitted;
3. The daily reporting of gross short sales will continue as will the publication to the market of aggregate short sales by security the day after trading; and
4. ASIC requires strict compliance with the ban on naked short selling as outlined in RG196.
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Where will the ban end, It is ridiculous that the regulators believe that the ban will hold stocks up. As already commented by 'investorpaul ' below, they have only put off the inevitable. If global economic conditions continue too deteriorate, stocks will fall regardless.
The funny thing is, traders can use the options market to replicate a short, by selling an at the money call and buying an at the money put. This options position will move dollar for dollar with the underlying stock.
The funny thing is, traders can use the options market to replicate a short, by selling an at the money call and buying an at the money put. This options position will move dollar for dollar with the underlying stock.
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Maybe the solution is to ban short selling forever?
Yes, that'll solve everything. Agree with everyone else, the whole ban is a joke, either ban the whole practice across the board for every stock, or unban it completely. Every stock should be subject to the same rules, what's the point of a free market if they pick and choose different rules for different companies? It's funny there's all this talk about protecting people's rights and capitalism, yet they're doing the exact opposite by banning short selling.
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Maybe the solution is to ban short selling forever?
Yes, that'll solve everything. Agree with everyone else, the whole ban is a joke, either ban the whole practice across the board for every stock, or unban it completely. Every stock should be subject to the same rules, what's the point of a free market if they pick and choose different rules for different companies? It's funny there's all this talk about protecting people's rights and capitalism, yet they're doing the exact opposite by banning short selling.
I agree 100% with you M34N.
Free market? Yeah, right.
So, propping up UNPRODUCTIVE fat-cat Big Bank financials - yet letting PRODUCTIVE non-financial sector companies go under - is supposed to be FAIR and JUST operation of a free market?
I feel ill.
numbercruncher
Beware of Dropbears
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Got to love the "free markets" that Governments sold to us huh ?
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Only 24 days to go now, before the extended ban on covered short selling of financial stocks is lifted on 6 March.
Will be interesting indeed to see how the banks perform by close of trading that day.
Then again, mebbe another extension will be offered if the ASX has plummeted a bit by then.
aj
Will be interesting indeed to see how the banks perform by close of trading that day.
Then again, mebbe another extension will be offered if the ASX has plummeted a bit by then.
aj
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...and now for some useless trivia! Is there any significance in ASIC's timing?
ASIC's ban on covered short-selling of financial stocks ends on 6th March - the eve of the "Nones of March" (7th March, Roman - "Nones" is always nominally 8 days before the Ides (15th March, Roman).
So, is there a tenuous link - the precursor - to the Ides of March?
Well, for the brainiacs -
"The Romans had special names for three specific days in each month. The system was originally based on phases of the Moon (Luna), and these days were probably declared when the lunar conditions were right. After the reforms of Numa Pompilius, they occurred on fixed days. The named days were:
Kalendae (Kalends) — first day of the month, from which the word "calendar" is derived. Interest on debt was due on Kalends.
Nones — depending on the month, could be the 5th or the 7th day; traditionally the day of the Half Moon.
Ides — depending on the month, could be the 13th or the 15th day; traditionally the day of the Full Moon. An auspicious day in the Roman calendar.
Months with Nones on the 5th and Ides on the 13th days: January, February, April, June, August, September, November, December.
Months with Nones on the 7th and Ides on the 15th days: March, May, July, October.
These rules are summarised in the following mnemonic:
In March, July, October, May
The IDES fall on the fifteenth day
The NONES the seventh; all besides
Have two days less for Nones and Ides."
or for the drooling shorters out there -
"NONES & IDES, IDES & NONES.....
Soon we short those stocks to bones...!!"
ASIC's ban on covered short-selling of financial stocks ends on 6th March - the eve of the "Nones of March" (7th March, Roman - "Nones" is always nominally 8 days before the Ides (15th March, Roman).
So, is there a tenuous link - the precursor - to the Ides of March?
Well, for the brainiacs -
"The Romans had special names for three specific days in each month. The system was originally based on phases of the Moon (Luna), and these days were probably declared when the lunar conditions were right. After the reforms of Numa Pompilius, they occurred on fixed days. The named days were:
Kalendae (Kalends) — first day of the month, from which the word "calendar" is derived. Interest on debt was due on Kalends.
Nones — depending on the month, could be the 5th or the 7th day; traditionally the day of the Half Moon.
Ides — depending on the month, could be the 13th or the 15th day; traditionally the day of the Full Moon. An auspicious day in the Roman calendar.
Months with Nones on the 5th and Ides on the 13th days: January, February, April, June, August, September, November, December.
Months with Nones on the 7th and Ides on the 15th days: March, May, July, October.
These rules are summarised in the following mnemonic:
In March, July, October, May
The IDES fall on the fifteenth day
The NONES the seventh; all besides
Have two days less for Nones and Ides."
or for the drooling shorters out there -
"NONES & IDES, IDES & NONES.....
Soon we short those stocks to bones...!!"
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I would say we're already seeing this impact already, especially in MQG. People are clearing the decks ahead of the date figuring they'll be able to buy the stock back at a better price.....like $5
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hahaha...yes, a little back hand jibe there which didn't go down too well with my offsider at the time.
