ID :
21053
Wed, 09/24/2008 - 22:25
Auther :
Shortlink :
http://m.oananews.org//node/21053
The shortlink copeid
ASX shrugs short selling ban impact
Equities and futures exchange operator Australian Securities Exchange Ltd (ASX) says
the temporary ban on short selling of shares that came into effect this week hasn't
materially impacted its equity trading volumes.
"We're not observing, at least in the first 2.5 days, any material reduction in
trading volumes," managing director and chief executive Robert Elstone told
shareholders at its annual general meeting.
"But we'll monitor that closely for rest of the month that the prohibition applies.
"We're getting dropouts of market-making activity in the derivative markets, but so
far it doesn't appear to be impacting overall trading volumes - and certainly not
underlying cash equities trading."
The Australian Securities and Investments Commission (ASIC) this week temporarily
banned short selling, whereby investors profit from falling share prices, in a bid
to reduce volatility in the local share market.
Mr Elstone added that equity trading volumes had lifted by 56 per cent, index
options volumes by 18 per cent and share price index (SPI) futures volumes by eight
per cent in the first quarter of 2008/09, compared to the same period last financial
year, amid very volatile market conditions.
But new listings were down by a massive 70 per cent, as companies shied away from
the stock market.
"As we approach the close of the first quarter of full-year 2009, initial public
offering activity for the first 12 weeks is well down on the prior comparable
period, by 70 per cent, in-line with trends in overseas markets," Mr Elstone said.
"Secondary capital raisings, while more subdued than the same period last year,
remains robust as recapitalisation - particularly in the banking sector - takes
place in response to the ongoing process of deleveraging and asset value impairment
that has been in train for the past 12 months or so."
ASX chairman Maurice Newman hit back at criticism of the exchange, following the
collapse of margin lending and stockbroking firm Opes Prime and broker Tricom.
"We accept that market supervision is of significant public policy importance given
the central role we play in helping to maintain Australia's reputation for financial
market integrity," Mr Newman said.
"However, what has been disappointing about the unprecedented level of criticism we
have received this year is that so much of it has been mischievous, misinformed
and/or just plain wrong.
"We can appreciate people's frustration and anger at steep falls in asset prices,
particularly if malpractice or rumour-rage has occurred, but some of the sweeping
statements laying unwarranted blame at ASX's or ASIC's door are simplistic in the
extreme."
Mr Newman, who has retired as ASX chairman and will be succeeded by David Gonski,
noted that financial markets are overseen by ASIC - backed by the Corporations Act
and its associated regulations - while supervision of listed entities and trading is
the domain of ASX.
He reiterated that ASX, which has dual but well-separated operational and
supervisory divisions, was overseen by both the Commonwealth Treasury and ASIC.
Mr Newman said it was not the ASX's domain to make listing and trading requirements
so strict that companies and other investment vehicles would think twice about
joining the exchange, and perhaps seek to expand through private equity.
"One of the things that does concern me is the moral hazard based on the critical
trust that somehow, one way or another, that governments can protect investors from
making wrong decisions," he said.
"There are certain issues which apply in confidence, which apply in the real world,
and most information that people need to rely on is out there in the prospectus -
and that's covered by the Corporations Act.
"Where there is a breach of the Corporations Act, ASIC decides whether to take
prosecution action."
Mr Newman said ASX already fined recalcitrant companies and traders - in some cases
by up to $500,000.
"At the end of the day we believe in the rule of law, not the rule of the sheriff,"
Mr Newman said.
"Constantly looking for regulatory solutions isn't the way to go ... a better way to
go is to improve the education of investors."
Mr Newman said ASX had hired an extra 19 people in its supervisory division over the
past 12 months, and that eight more would be added during ASX's 2009 fiscal year.
ASX shares rose 28 cents to $32.16.
the temporary ban on short selling of shares that came into effect this week hasn't
materially impacted its equity trading volumes.
"We're not observing, at least in the first 2.5 days, any material reduction in
trading volumes," managing director and chief executive Robert Elstone told
shareholders at its annual general meeting.
"But we'll monitor that closely for rest of the month that the prohibition applies.
"We're getting dropouts of market-making activity in the derivative markets, but so
far it doesn't appear to be impacting overall trading volumes - and certainly not
underlying cash equities trading."
The Australian Securities and Investments Commission (ASIC) this week temporarily
banned short selling, whereby investors profit from falling share prices, in a bid
to reduce volatility in the local share market.
Mr Elstone added that equity trading volumes had lifted by 56 per cent, index
options volumes by 18 per cent and share price index (SPI) futures volumes by eight
per cent in the first quarter of 2008/09, compared to the same period last financial
year, amid very volatile market conditions.
But new listings were down by a massive 70 per cent, as companies shied away from
the stock market.
"As we approach the close of the first quarter of full-year 2009, initial public
offering activity for the first 12 weeks is well down on the prior comparable
period, by 70 per cent, in-line with trends in overseas markets," Mr Elstone said.
"Secondary capital raisings, while more subdued than the same period last year,
remains robust as recapitalisation - particularly in the banking sector - takes
place in response to the ongoing process of deleveraging and asset value impairment
that has been in train for the past 12 months or so."
ASX chairman Maurice Newman hit back at criticism of the exchange, following the
collapse of margin lending and stockbroking firm Opes Prime and broker Tricom.
"We accept that market supervision is of significant public policy importance given
the central role we play in helping to maintain Australia's reputation for financial
market integrity," Mr Newman said.
"However, what has been disappointing about the unprecedented level of criticism we
have received this year is that so much of it has been mischievous, misinformed
and/or just plain wrong.
"We can appreciate people's frustration and anger at steep falls in asset prices,
particularly if malpractice or rumour-rage has occurred, but some of the sweeping
statements laying unwarranted blame at ASX's or ASIC's door are simplistic in the
extreme."
Mr Newman, who has retired as ASX chairman and will be succeeded by David Gonski,
noted that financial markets are overseen by ASIC - backed by the Corporations Act
and its associated regulations - while supervision of listed entities and trading is
the domain of ASX.
He reiterated that ASX, which has dual but well-separated operational and
supervisory divisions, was overseen by both the Commonwealth Treasury and ASIC.
Mr Newman said it was not the ASX's domain to make listing and trading requirements
so strict that companies and other investment vehicles would think twice about
joining the exchange, and perhaps seek to expand through private equity.
"One of the things that does concern me is the moral hazard based on the critical
trust that somehow, one way or another, that governments can protect investors from
making wrong decisions," he said.
"There are certain issues which apply in confidence, which apply in the real world,
and most information that people need to rely on is out there in the prospectus -
and that's covered by the Corporations Act.
"Where there is a breach of the Corporations Act, ASIC decides whether to take
prosecution action."
Mr Newman said ASX already fined recalcitrant companies and traders - in some cases
by up to $500,000.
"At the end of the day we believe in the rule of law, not the rule of the sheriff,"
Mr Newman said.
"Constantly looking for regulatory solutions isn't the way to go ... a better way to
go is to improve the education of investors."
Mr Newman said ASX had hired an extra 19 people in its supervisory division over the
past 12 months, and that eight more would be added during ASX's 2009 fiscal year.
ASX shares rose 28 cents to $32.16.
