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

As senators and, I am sure, those listening are aware, I have commented extensively on the global financial crisis, which had its origins in the United States as a consequence of what is known as the US subprime, which has consequently, in a range of areas, infected the financial systems of most countries around the world. Whilst the Australian economy is sound, we are not immune from the global slowdown and the recessions that are possibly emerging in some countries around the world. There are no easy solutions or quick fixes to this global financial crisis, but today the Rudd Labor government has announced two important steps—critical steps—to make a safe regulatory system safer in this current environment.

Today I have announced two major reforms that relate to the regulation of short selling and that activity in the Australian markets, and strict new controls on the behaviour of credit rating agencies. Short selling is defined, most simply, as selling shares that usually an individual or entity does not own on the assumption that you buy them back with a fall in value and make a profit. A naked short sale is the same but, in this case, the short seller does not own the shares, has not borrowed and usually does not have a pathway to obtain the shares they are selling. The market and the community across Australia and the world have taken action to better regulate short selling, usually with temporary bans, which have been put in place in Australia, the US, the UK and across Europe. After coming to government, we identified a gap in the Corporations Act in respect of the regulation and supervision of short selling in Australia. That gap was left open—