France, Italy, Spain and Belgium plan to enact bans on short selling or on short positions, the European Securities and Markets Authority said today.
“Some authorities have decided to impose or extend existing short-selling bans in their respective countries,” ESMA said in a statement on its website. “They have done so either to restrict the benefits that can be achieved from spreading false rumors or to achieve a regulatory level playing field, given the close inter-linkage between some EU markets.”
Information on the measures, which take effect tomorrow, will be posted on the relevant regulators’ websites, ESMA said.
The benchmark Stoxx 600 Banks Index advanced 3.9 percent after falling as much as 3.5 percent. French lender Societe Generale SA rebounded in Paris trading after dropping as much as
9.1 percent. Chief Executive Officer Frederic Oudea defended France’s second-largest bank, whose shares tumbled 15 percent yesterday, saying speculation that the country’s creditworthiness is in doubt is “absolute rubbish.”
France’s stock market regulator said that rumors had been circulating about French financial companies and that the spreading of “unfounded information” may lead to punishment. The market turbulence has led Turkey to curb short sales and threaten “severe penalties” for stock manipulation, joining nations from Greece to South Korea in trying to stem bearish bets after the worst tumble in global shares since 2008.
Nations including the U.S., France and Germany followed the U.K. in September 2008 in imposing temporary bans on short selling of bank stocks to stem the damage being done to firms’ market value after the collapse of Lehman Brothers Holdings Inc.
The board of Italy’s securities markets regulator, Consob, postponed a meeting to review market activity to tomorrow morning, before the market opens, said an official at the Rome-based watchdog, who couldn’t be identified in line with its policy. The meeting will address short sales and measures to review the practice, the official said.
The U.K.’s authority today repeated that it has no plans for curbs on short selling of stocks.
“We have no plans to introduce a short selling ban,” Christopher Hamilton, a spokesman for the U.K. Financial Services Authority, said in a telephone interview earlier today.