Short-Selling Bans Only Delay the Inevitable
If Europe really wants to take action against the hedge funds, then it should do so as one. The evidence for limited short bans isn’t compelling.
Italy takes action.
Photographer: Jan Hetfleisch/Getty Images EuropeThings are getting real for traders. Italy and Spain have triggered a one-day ban on short selling certain stocks on their respective stock exchanges, and also on U.K. Exchanges, after Thursday’s markets carnage.
It’s done the trick for now as both markets led a recovery rally in Europe on Friday morning, but there’s no news yet on whether the prohibition will be extended. Other European regulators are all doing their own thing; symptomatic of the wider European Union response of dither and delay. A temporary piecemeal fix is not going to solve much bar buying a bit of breathing room. Short sellers tends to come back as soon as the ban is lifted.