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Market regulators in Spain, Italy, and France all extended bans on short selling today, with previous bans set to expire after trading ends on Friday.While this still does not constitute a euro-wide short selling ban — Germany, at least, is not participating — it is a coordinated move that belies fears that speculators will wreak havoc in European markets.
Greek regulator ESMA and Belgian regulator FSMA will also extend their short selling bans, even though bans imposed previously were not set to expire this week.
“The FSMA is acting in close cooperation with the other European regulators that limited short selling and under the coordination of [European Securities and Markets Authority] and will continue to closely monitor the markets and their developments,” the Belgian regulator said in a statement (via WSJ).
Bans in Spain and Italy are set to end September 30, while France’s ban will last through November 11. All regulators emphasised that they will lift bans when the markets allow. Some experts, however, see no end in sight.
No one is convinced that these bans will actually work to limit speculation.
As with bans previously in place, these extensions will focus on stocks of financial companies.
Andrzej Kawalec, a fund manager at Moneta Asset Management in Paris, told WSJ, “Short selling definitely makes things worse when there are downward swings, but when there is fundamental reasons for a decline, shares will fall anyway.”