Countries move to curb short-selling amid financial crisis

Other News Materials 19 September 2008 20:10 (UTC +04:00)

Australia, Britain and the US have moved to curb a stock-trading practice called short-selling to help put a brake on the down-slide of world stock markets, dpa reported

For the US, the move is "intended to prevent investors from driving down the price of particular stocks for their own personal gain," warned US President George W Bush Friday morning.

He said that "anyone engaging in illegal transactions will be caught and prosecuted."

The moves, some of them temporary and limited to stocks in certain sectors, were taken by New York's Securities and Exchange Commission, the Australian Securities and Investments Commission (ASIC) and Britain's Financial Services Authority.

ASIC said it was concerned some individuals were spreading false and misleading information about listed companies to provoke fire sales of securities at low prices.

New York officials have suspended short selling for 800 stocks and launched an investigation into the practice. Short-selling itself is legal, but not if linked with spreading rumours that can help an investor's cause.

"The Commission is committed to using every weapon in its arsenal to combat market manipulation that threatens investors and capital markets," SEC chairman Christopher Cox said in a statement.

The Australian Securities Exchange (ASX), which regulates the stock market, said that on Monday it would cancel a list of stocks approved for naked short-selling.