Australia lifts ban

Australia on Monday lifted an eight-month ban on short selling of financial shares in response to reduced market volatility.

The government first announced in September a 30-day ban on covered short selling -- the sale of borrowed stock that a vendor hopes to buy back at a lower price and therefore make a profit -- after U.S. and British regulators also restricted the trading practice, which was blamed for undermining volatile markets.

Naked short selling, where a trader sells stocks without first ensuring that they are available, was banned indefinitely.

Short selling is seen variously as encouraging markets to fall and as a legitimate strategy that ensures an efficient and free market.

Australia's market regulator, Australian Securities and Investments Commission, or ASIC, in November lifted the ban on covered short selling of shares in companies other than banks, property developers and other financial institutions. But new regulations are now imposed on short sellers of non-financial stock aimed at improving transparency.