The extended ban on short-selling, an abrupt regulatory measure aimed at restoring stability in the domestic market, has reduced liquidity while fuelling intra-day volatility, an analysis from Plato Investment Management has found. Meanwhile late last month the $5 billion Equipsuper industry fund, which became one of the most prominent opponents of predatory short-selling when it suspended its securities lending program in April, confirmed that suspension remained in place for both its Australian and international equities.
“We still needs to be convinced that there is sufficient disclosure and transparency around short-selling in Australia,” said Equipsuper CEO Robin Burns. “We’ve got nothing against shortselling, even naked short-selling has a legitimate role in the market, but we simply have a right to know what the true positions of our stocks are.” The study by Plato, a quantitative Australian equity boutique, compared trading data of ASX300 companies in the 15-day windows before and after the September 21 announcement of the ban, plus a longer-term analysis.
