Australian regulator brings an end to the ban on shorting of financial stocks

THE AUSTRALIAN securities regulator yesterday lifted its temporary ban on short-selling of financial stocks after eight months.<br /><br />The Australian Securities &amp; Investments Commission (ASIC) became the final major market to end the ban, but warned that it could immediately reintroduce the ban, or fresh restrictions, if market conditions warranted it.<br /><br />&ldquo;ASIC has reviewed market conditions and considers that the balance between market efficiency and potential systemic concern has now moved in favour of the ban being lifted,&rdquo; the regulator said.<br /><br />ASIC imposed the ban last September amid similar measures taken by regulators in New York and London in response to the collapse of US investment bank Lehman Brothers.<br /><br />The regulator lifted its ban on short selling of non-financial shares, but then twice extended the ban on the shorting of financial shares, despite criticism from industry veterans that the constraints did little to prevent market volatility.