ASIC's decision to extend its ban on covered short-selling of financial securities until 6 March may only create additional uncertainty for investors, according to an alternative investments association.
"Local financial institutions are not reporting multi-billion dollar write-downs in their loan and investment portfolios like many overseas banks," Alternative Investment Management Association (AIMA) Australia chairman Kim Ivey said.
"Unless ASIC is aware of major write-downs in the pipeline for Australian financial companies that are large enough to severely affect their financial integrity, we see little justification then for the overt protectionism and share price manipulation now set in place by ASIC."
If local banks have given ASIC information on significant funding shortfalls or planned capital raisings in order to justify keeping the ban, then the information warrants immediate disclosure, Ivey said.
Every major country except Australia has removed restrictions on covered short-selling. Ivey said ASIC's move to ban covered short-selling, a legitimate investment tool, further alienates Australia from global capital flows.
American and British banking and financial stocks plummeted on 20 January, when Barack Obama was inaugurated as the 44th US President.
The S&P 500 Financials Index dropped 17 per cent, while UK lender Lloyds Banking Group lost a third of its value and Barclays slumped 17.2 per cent.
AIMA Australia has 60 members including fund-of-fund managers, institutional investors, hedge funds, prime brokers, lawyers and auditors.
