Special update: Short selling restrictions
Updated 21 October 2008
In recent weeks we have seen unprecedented events unfold in global financial markets, which have resulted in increased volatility. The seriousness of events has prompted US authorities and market regulators in several major economies to impose restrictions on short selling in an effort to reduce volatility and stabilise markets.
In Australia, ASIC imposed a prohibition on short selling for 30 days from 22 September 2008. On October 21, ASIC announced that the ban would be extended until November 18. The rules vary within different jurisdictions – in the US the ban only referred to financial stocks and expired on October 8th.
BTIM has assessed the impact across our portfolios of the ASIC restrictions on short-selling. For our Australian equities funds, there is no direct impact to our investment processes, apart from additional volatility in investment markets resulting from the restrictions. For our alternative investment portfolios, based on consultation with our underlying managers and our review of the funds, we believe that these short selling restrictions have had no material effect. However, the continuing volatility in global financial markets has negatively impacted the recent performance of the alternative investment portfolios, and has also had some impact on our diversified funds, which allocate assets to the alternative asset class. More detailed information on performance is available in our Performance Updates (see Investment Funds at the left of this page).