EU: Restrictions on short-selling end today

By: Miguel A. Rodriguez

09:45, 14 September 2020

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The short-selling ban ends today as some markets corrected.

Short-selling is an investment strategy that allows traders to speculate on the decline of a stock or securities price. Short-selling happens when a trader borrows a security and sells it on the market, and plans to repurchase it at a lower price. Short-selling appeals to most traders because, as the name says, it is usually a short-term operation, but it can be applied for medium and long terms as well.

Earlier this year, a few European countries temporarily banned short selling because of the extreme market volatility caused by the pandemic, despite hedge funds pressure of removing it. Regulators in Austria, Belgium, France, Greece, and Spain restricted short-selling until the middle of the current month. Italy was the exception, as the ban was supposed to end mid-June.

The authority supervising the securities and markets – European Security and Markets Authority (ESMA) – stated that the countries mentioned above have decided to end the ban today.

France’s AMF (Autorité des marchés financiers) recorded a normalization of trading since the ban came in force. However, according to the World Federation of Exchanges, AIMA, and Managed Funds Association (hedge funds associations), alongside the European Principals Traders Association, appealed to the French markets regulator and the Ministry of Finance to reconsider the decision. "Over the longer term, the bans risk undermining confidence in key European financial markets and hampering the goal of a capital markets union, something that will be vital to European recovery from the profound economic shock caused by Covid-19.”

As a proof of solidarity, Italy has decided to lift its ban today also. 

Germany and Britain were also urged to take measures against short-selling. Both countries declined to take action.

Capex provides tools that support the development of personal strategies – the Integrated Tools suite, or Trading Central. During the time when the over-the-counter short selling market was put on hold, Capex clients were able to trade on CFDs on both market directions.

See the difference when trading with CAPEX.com by accessing elite features:  

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  • Powerful WebTrader platform and mobile app 
  • High-end integrated trading tools  
  • Full license and regulation from top regulators

Sources: forexlive.com, reuters.com, irishtimes.com, investopedia.com


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This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided.