Australia To Continue Ban On Naked Short Selling, Regulate Credit Rating Agencies

Stephen Harris

13 November 2008

The Australian government has put forward legislation that will ban naked short-selling - when the seller does not have an agreement to borrow the shares sold - and require other short-selling transactions to be adequately disclosed.

Corporate Law Minister Nick Sherry said: “There are no easy solutions or quick fixes to the global financial crisis but we are taking decisive action to protect our markets, especially from trading practices that may involve manipulation or abuses. We'd certainly want passed in the next sitting fortnight." This is from 24 November to 4 December.

"We totally support the bill's intention to ban naked short-selling, and to institute greater transparency into covered short-selling activity on the Australian Stock Exchange," Kim Ivey, chairman of the Alternative Investment Management Association's Australian arm, said in a statement.

The government is also proposing changes to the regulation of credit ratings agencies that will require them to hold an Australian Financial Services Licence and report annually on the quality and integrity of their ratings processes.