Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Hansard source

It appears that the Liberal opposition have no understanding of the way in which short selling is regulated in this country. What happens in Australia is that the independent regulator, ASIC, regulates short selling. The independent supervisor, the ASX, regulates naked short selling. They are the two organisations that have the power to regulate short selling in this country. I am surprised that the Liberal opposition do not know this because they established that system. They established an independent regulator. As I have just said, they created the independent regulator, they gave it its independent powers and indeed they appointed the three current independent commissioners. Why they criticise an independent regulator I do not know. It is very inappropriate in these times. And the opposition, when in government, gave the power to the ASX as an independent supervisor to control naked short selling.

What I have said on many occasions is that the government would not legislate to control short selling. It is the responsibility of independent regulators to make that decision, based on market decisions. Clearly those opposite do not understand and have not been following those market conditions. Let us look at the last two weeks. Two weeks ago, the American government bailed out Fannie Mae and Freddie Mac. Last week the United States government announced a massive bailout of AIG, because the infection in the financial system in the United States was spreading to the insurance system. In that context, not just ASIC, the independent regulator, and not just ASX but almost every other regulator around the world decided to introduce limits on short selling and effectively ban it, with a number of variations depending on the jurisdiction.

They decided to ban it, and I agree with them because circumstances changed last week. Those opposite do not appear to have noticed that the infection in the financial system in the United States is not getting any better; it is getting worse. So the independent regulator and the independent supervisor, the ASX, took the decision to limit it and effectively put an interim prohibition on short selling. They made the call and I agree with them because market circumstances changed and became so serious that they had to minimise market manipulation. Those opposite should stop bagging the independent regulator and get on and provide some budget certainty and pass our budget.