Evidence that shorting ban “a mistake”

Liq­uid­i­ty in the restrict­ed stocks fell by about 10 per cent com­pared with a rise of 50 per cent in trad­ing vol­umes in the con­trol sam­ple, and trans­ac­tion costs rose by 150 per cent com­pared with the con­trol sam­ple. A sep­a­rate study by Cass Busi­ness School found that volatil­i­ty of restrict­ed stocks rose sig­nif­i­cant­ly more dur­ing the ban than volatil­i­ty of unre­strict­ed stocks.” extract from an Op Ed in the Finan­cial Times

If this is accu­rate, the Aus­tralian Secu­ri­ties and Invest­ment Com­mis­sion offers pre­cise­ly the wrong jus­ti­fi­ca­tion for extend­ing its still more dra­con­ian ban on short-sell­ing until 6 March.

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