Spain and Italy moved to ban short-selling of stocks as pricesdropped and the euro traded below its lifetime average against thedollar on concerns about the European Union debt crisis.
|Spain's stock market regulator, the CNMV, said it was banningshort selling of all stocks for three months, amid “extremevolatility.” Italy's Consob said its ban, scheduled to last a week,was introduced on some banking and insurance shares because of the“recent performance of stock markets.”
|Today's bans echoes decisions in August of last year by France,Belgium, Spain and Italy to temporarily ban short selling offinancial stocks in an effort to stabilize markets after Europeanbanks, including Societe Generale SA, hit their lowest levels sincethe credit crisis of 2008.
|“I don't think it is particularly smart but it is to beexpected,” said Owen Callan, senior dealer at Danske Bank A/S inDublin. “Last time around it didn't really have any lasting impact.This is trying to avert hedge-fund speculation, but the sell-off isnot about speculation. This is not hedge funds trying to bring downthe market.”
|The Spanish prohibition also covers over-the-counterderivatives, the CNMV said. Market making activities are excludedfrom its measures.
|The European Securities and Markets Authority “is aware” of thebans, David Cliffe, an ESMA spokesman, said in a telephoneinterview today. ESMA was set up last year to harmonize theimplementation of market rules across the European Union.
|Bloomberg News
|Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.
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