Oct. 6--As Asia holds it breath for yet another round of possible fallout from the ongoing economic crisis in the United States and other developed economies, authorities in the region are already preparing to contain the rout that has been taking place in the financial markets.

Markets such as South Korea, Taiwan and Indonesia have placed bans on short-selling to contain sharp declines in the equity markets, following the lead of the vaunted free-market economy of the United States.

Short-sellers try to profit by betting that stock prices will fall. In a short sale, traders borrow shares from their broker and then sell them. If the price drops, they buy back the stock, return it to their broker and pocket the difference minus fees.

In addition to the bans on short-selling in some markets, authorities across the region have been declaring that they have various policies to cut the downside risk. But with the market in Shanghai (one of the biggest in the region) being closed for the entire week, the likelihood remains high that there could be a sharp fall when it reopens for trade on Monday.

As most markets in the Asean region take their cues from Shanghai and the Hang Seng (Hong Kong), a fall on Monday could be one that most investors would watch out for.

Regulators in Seoul have already said they would temporarily ban short-selling of all stocks to arrest a 24 percent slump in the nation's stock market this year. Indonesia's stock exchange banned short-selling for the month of October, citing unstable market conditions. Taiwan, which on Sept 21 banned the short-selling of 150 stocks for two weeks until yesterday, said it would tighten limits on short-selling for the remainder of the year. It did not say if the ban would end on Oct 3 as scheduled or would be extended.

Hong Kong said it would take "more aggressive" action against so-called abusive short-sellers, while the Philippine Stock Exchange approved a circuit-breaker rule for a 15-minute trading halt if the benchmark index drops 10 percent from the previous day's close, another first for the usually freely tradable equity market.

Taiwan's Financial Supervisory Commission said that the amount of borrowed shares that can be traded each day will be limited to 10 percent of a company's listed stock, from 25 percent.

All this comes as the financial crisis in the West is already hitting corporate earnings, given the heavy reliance of so many Asian companies on export revenue in developed markets including the US.