Short-selling ban begins today

The Australian stock market is expected to react favourably to the news that the corporate regulator has banned the practice of short-selling.The practice will no longer be allowed when the stock market opens today. Short selling is the trading of borrowed shares in such a way that the investor makes money when they lose value. The Australian Securities and Investments Commission has announced that short selling of all stocks will not be allowed because it may have been causing unwarranted price fluctuations of stocks.CommSec's chief economist Craig James says the practice should have been banned years ago."If you don't like a stock you shouldn't be investing in it in the first place, you shouldn't be selling it down and disadvantaging ordinary investors and superannuation holders," he said.Mr James says he sees the ban as a positive move."There will have to be a little bit of short covering for those companies that have been selling down stocks and that may provide a booster to the share market."We're looking for the share market to open up 150 points higher but given these significant short selling curbs it may be a fair degree higher."

ABC News, 22 September 2008