Posted for fair use
Alan Kohler
Australia blows up the hedge funds
Last update 6:17 AM, 22 Sep 2008
Australia’s stunning ban on all short-selling is a revolution that will likely flow around the world in a series of dominoes from tomorrow.
The global hedge fund industry will effectively be shut down overnight.
The business of securities lending will also shut down.
The way that equities markets have operated for more than a decade will suddenly and fundamentally change from this weekend.
Once the US Securities and Exchange Commission (SEC) banned all short-selling of financial stocks on Friday – naked and covered – the Australian market was facing an impending tsunami of short-selling by hedge funds looking to lay off long positions and take leveraged bets on the downside.
France, Germany, Ireland, Switzerland, Canada, and the UK have followed the US in banning all short-selling of financial stocks. They had little choice. Asian markets will also have little choice but to follow Australia tomorrow in extending the ban to all stocks.
The danger inherent in being the only market in which the world’s long-short hedge funds are allowed to operate is simply too great. It would be like being the only person with a bleeding cut swimming in shark-infested waters.
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http://www.businessspectator.com.au/...cument&src=sph