THE corporate regulator has widened a split between Australia's banks and the rest of the finance sector after extending its ban on the short selling of financial stocks.

The ban's detractors called on the Australian Securities and Investments Commission, headed by Tony D'Aloisio, to clarify what it has learnt since it imposed the ban six months ago, why it has decided to keep it, and what needs to happen for it to be lifted.

The regulator extended the ban yesterday to the end of May. It was first imposed in September. A ban on short selling companies with no links to the finance industry has already been lifted.

ASIC said it was pursuing a "cautious approach" amid "potential damage from aggressive or predatory practices" in volatile markets. It had conducted "extensive research and analysis" before making its decision.

But the chief executive of the Investment and Financial Services Association, Richard Gilbert, drew attention to the vagueness of ASIC's statement.