The Australian Securities and Investments Commission extended a ban on the short selling of financial stocks imposed at the height of last year’s global financial-market turmoil. The ban will remain in place until March 6, ASIC said in an e-mailed news release. “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,” it said A temporary ban on all forms of short selling in Australia was introduced in September in an attempt to contain financial- market volatility after the collapse of U.S. investment bank Lehman Brothers Holdings Inc earlier that month. Similar steps were taken worldwide, including in the U.S. and U.K, as credit markets froze, sending stock markets worldwide tumbling. Lehmans’ collapse fueled a rout that halved the value of equity markets worldwide to about $30 trillion in 2008. The MSCI World Index, which tracks shares in 23 developed nations, tumbled a record 42 percent last year as credit-related losses at financial firms topped $1 trillion. Australia permanently outlawed naked short selling, with a few exemptions, in November, while lifting the ban on covered short sales for most non-financial companies. The ban on short selling of financial securities was to remain until at least Jan. 27, ASIC said at the time. In a short sale, traders borrow shares from their broker that they then sell. If the price drops, they buy back the stock, return it to their broker and pocket the difference. In a naked short sale, traders don’t need to borrow the shares.

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