Markets

Regulators ban short selling on certain stocks

Italian and Spanish authorities move to stabilise markets after brutal trading session

Short-selling restrictions were also put in place for some Asian markets as regulators sought to stabilise matters.

Fri Mar 13 2020 - 08:25

After a brutal trading session on Thursday, Italian and Spanish securities regulators are banning short sales during Friday on some stocks.

The Spanish ban will affect 69 stocks, including all liquid stocks that fell more than 10 per cent Thursday and all illiquid stocks that fell more than 20 per cent, while in Italy 85 stocks will be affected by the ban.

Short selling in Italian and Spanish securities will also be banned in all UK trading venues for the day, the UK's Financial Conduct Authority (FCA) said in a statement.

A spokesman for the FCA declined to comment on whether the regulator would consider a ban on short sales of UK stocks.

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Among the shares included on the FCA list are Lazio football club, Poste Italiane, Campari Fiat Chrsyler, Bana generali, Mediobanca, Generali, Pirelli, Unicredit, Ferrari, Telecom Italia, Banca Monte dei Paschi di Siena and Piaggio.

Italy's FTSE MIB plunged 17 per cent on Thursday, while Spain's IBEX-35 slumped 14 per cent, both record losses, amid a global sell-off as measures announced by the European Central Bank and the US to combat the economic effects of the coronavirus disappointed.

Both benchmarks are down more than 33 per cent this year, the worst among the largest European markets.

UniCredit SpA, Telecom Italia SpA, Banco Santander SA and Telefonica SA are among the companies that will be protected by the short-selling ban Friday.

In Germany, Deutsche Boerse is considering a ban on short selling of stocks, a spokesman said. The country’s benchmark index plunged 12 per cent on Thursday.

Short-selling restrictions were also put in place for some Asian markets, with South Korea’s Financial Services Commission going the furthest by banning short-selling of shares listed on Kospi, Kosdaq and Konex for six months.

In Thailand, short sales were not banned, but rules are being adjusted for current market conditions, according to the president of the country’s stock exchange. – Bloomberg

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