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UPDATE - ASIC partially lifts ban on Short Selling

The Australian Securities and Investment Commission (ASIC) have confirmed the road map for the lifting the ban on Covered short selling.

ASIC will lift the ban on covered sales of non financial stocks from opening trade on 19 November 2008.

The ban on Covered short selling of financials will continue until at least 28 January 2009.

Naked short selling remains banned.

New categories of Long sales, and Short sales (includes covered and Exempt sales) have been introduced.

Brokers must ask clients whether a sale is a Long or a Short sale. Clients are obliged to inform brokers and brokers must report all Short sales to ASX who will issue a report the next day.

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CONTRACTS-for-difference markets have been thrown into confusion by the Australian market regulator's decision to ban short selling for an initial 30 day period starting Monday the 22nd of September 2008. This followed suit with the US regulator who a week earlier placed a temporary ban on the shorting of financial stocks.

Several CFD providers acted quickly yesterday, stopping clients from taking short positions in Australian shares, while still permitting such positions on commodities, currencies and indices.

The complex products are aimed at retail investors, who agree to exchange the difference in the price of a security between the time a contract is opened and the time it is closed.

The Australian Securities Exchange, which also runs a CFD platform, has instructed brokers to seek guidance from the Australian Securities and Investments Commission.

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Everybody has felt the US Subprime crash, or the “credit crunch”. It has affected all of the major stock markets in the world, hit some of the largest investment banks and crippled other financial organizations who focus in the lending space both large and small.

There are a couple of things one can do in this time of news driven, manic volatility to help reduce risk and losses.

"Reduce your position sizes, move your stops further away on long-term trades while keeping them tight for day trades, take profits on short-term trades for frequently, and be more patient with longer term positions"

See Trading Volatile Markets for the full article on how to navigate these uncertain times.