Australia extends ban on covered short selling

SYDNEY, Oct 21 - Australia's securities watchdog extened a ban on covered short-selling for non-financial stocks for another 28 days until Nov 18, and would lift the ban for the start of trading the next day.

The Australian Securities and Investments Commission, which placed a 30-day ban on short selling in September, said on Tuesday it would continue the ban on financial stocks until Jan. 27.

Covered short selling, unlike naked short-selling, requires the seller to first borrow stock.

Australia followed the United States, Britain and some other European markets in cracking down on a practice that regulators feared could worsen the global financial crisis.

Short-selling, designed to profit from falling share prices, is favoured by hedge funds.

"The financial markets are still fragile, so we feel the reopening of covered short sales should be done in stages and in a measured way over an extended period and have regard to systemic issues, particularly for financial stocks," Commission Chairman Tony D'Aloisio said in a statement.

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