Australiaâ??s corporate regulator is to extend its ban on the short selling of financial stocks by almost three months amid ongoing market volatility.

The Australian Securities and Investments Commission (ASIC) said the potential loss of some market efficiency or price discovery due to the ban was justified in the current market circumstances.

The decision to extend the ban was made on the basis that in recent days the Australian share market has fallen to five-and-a-half year lows and the trading of some financial sector stocks has been especially volatile.

The extension of the ban was largely expected since banks and listed property trusts had been lobbying the regulator in the fear that they would be targeted by short- sellers if the ban were lifted.

ASIC said on Thursday it would keep the regime in place until May 31, leaving Australia the only developed economy to continue enforcing such a ban.