Five EU states renew bans on short-selling in pandemic

PARIS (Reuters) – Five European Union countries renewed their bans on short-selling shares on Wednesday, citing persistent uncertainties over the impact of the coronavirus pandemic on markets.

Market regulators in France, Austria, Spain, Belgium and Greece said they would extend bans that had been due to expire in coming days.

“The temporary short selling ban… is unavoidable due to the ongoing serious market uncertainty in connection with the COVID-19 virus,” said Helmut Ettl and Eduard Mueller, co-heads of Austrian financial market regulator FMA.

“Speculative short selling can fuel market turbulence and lead to considerable risks… Our action has proven to be unavoidable, effective and appropriate.”

The bans were introduced last month in light of extreme volatility in markets as investors sought to price in recession due to national lockdowns to fight the pandemic. Italy also has a ban until June.

Short-selling involves bets on falling shares, which the regulators said could make markets worse in such conditions.

The EU’s markets watchdog, the European Securities and Markets Authority (ESMA) said the renewals have been aligned so that all the bans expire on the same day, May 18.

“ESMA considers that the proposed measures are justified by current adverse events or developments which constitute a serious threat to market confidence and financial stability,” the Paris-based EU watchdog said in a statement.

Market participants criticised the patchwork nature of the initial bans with their differing expiry dates. Germany and Britain have so far declined to introduce their own bans.

“These decisions are bad for investors, bad for markets, and bad for the economy as a whole,” said Bryan Corbett, president and chief executive of the Managed Funds Association, a global industry body that represents hedge funds, who often pursue short-selling investment strategies.

“We urge other nations to follow the evidence and avoid any further restrictions on short selling,” Corbett said.

Reporting by Gwenaelle Barzic in Paris, Jessica Jones in Madrid, Philip Blenkinsop in Brussels and Kirsti Knolle in Vienna, writing by Huw Jones, Editing by Alistair Bell

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