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#1 22-03-2020 10:43:13

johnedward
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From: Paris - France
Registered: 21-12-2009
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Coronavirus: EU regulators ban short selling

Coronavirus: EU regulators ban short selling


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Some financial regulators have decided to implement emergency measures in response to the market volatility caused by the lethal and new Coronavirus. In recent days, their attention has focused on the short selling of certain financial assets.

In short, short selling is a trading strategy that allows traders to take advantage of falling markets. Short selling means that you sell a borrowed asset in the hope that its price will fall, and once it does, you can buy it back later to generate a profit.

Belgium
Belgium's Financial Services and Markets Authority (FSMA) announced this week that it has banned all short selling positions on the Belgian stock exchange.

This includes: "any transaction that creates or relates to a financial instrument and the effect or one of the effects of which is to confer a financial advantage on the natural or legal person in the event of a fall in the price or value of another financial instrument".

This prohibition will remain in force from 18 March to 17 April and applies irrespective of where the transaction is carried out.

Austria
The FSMA is not alone in taking these measures, as the Austrian Financial Market Authority (FMA) implemented a similar ban 3 days ago, which is also in effect for 4 weeks, but which could be lifted earlier if necessary.

France
The Financial Market Authority (AMF) of France has also implemented a ban on short selling of shares admitted to trading on French markets for a one-month timespan.

Spain
The Spanish regulator, the Comisión Nacional del Mercado de Valores (CNMV), has also introduced a similar ban. The measures came into effect this Tuesday, before the opening of the trading session and will expire after the close of the session on the 17th next month.

Regulators' general response
European regulators are not alone in their efforts to reduce some of the risks associated with the increased trading volumes and volatility resulting from the Coronavirus panic.

In Australia, the Australian Securities and Investment Commission (ASIC) imposed emergency trading measures as of this Tuesday. In particular, stock market participants were asked to limit the number of trades executed each day until further notice.

According to the instructions of the supervisory body, firms are required to reduce by 24% the number of trades executed from the levels executed on Fridays.

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