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EDHEC-Risk Institute Denounces Short Selling Bans
August 12, 2011--EDHEC-Risk Institute condemns the August 11 decisions by the financial market authorities in
Belgium, France, Italy and Spain to impose or extend short-selling bans in the wake of renewed
market volatility.
These hasty decisions are not only devoid of theoretical basis, but also fly in the face of empirical
evidence. Academic studies, including work by EDHEC-Risk Institute researchers, have documented
the positive contribution of short-sellers to market efficiency and shown that constraining short sales
significantly reduces market quality – by reducing liquidity and increasing volatility – and can have
unintended spillover effects.
In a series of research articles, EDHEC Business School Professor Ekkehart Boehmer and his coauthors have studied short selling activities, looking at the type of information possessed by shortsellers1, at the impact between short selling activities and abnormal returns2, and at the link between short-selling and the price discovery process3. They established that short sellers are important contributors to efficient stock prices, that short interest contains valuable information for the market, that information is impounded faster and more efficiently into prices when short sellers are more active and that short sellers change their trading around extreme return events in a way that aids price discovery.
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Source: EDHEC-Risk Institute
France reports zero second-quarter GDP growth
August 12, 2011--France's statistics office said economic output, as measured by gross domestic product, was zero in the April-June period versus a first quarter that, at 0.9 percent, was the best in almost five years.
The main cause was a drop in household consumption, which was down 0.7 percent from the first quarter.
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Source: Fox Business News
UK contingency plans may fall short
August 12, 2011--George Osborne on Thursday hinted at “contingency plans” designed to shield the British banking sector from a disaster in the eurozone – scenarios that Sir Mervyn King, governor of the Bank of England, has said fall under the headings of “the unimaginable and the unmentionable”. How effective might such plans be?
The FT sketches out the divergent outcomes for the UK economy and its banking sector – and gauges their ability to withstand the worst effects.
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Source: FT.com
European short-selling ban comes under attack
August 12, 2011--Fuming traders and marketmakers have scrambled to cover short positions and rejig their trading platforms after a late-night announcement that four European countries were banning short selling of financial stocks.
Compliance officers, traders and lawyers worked through Thursday night to implement the 15-day prohibition aimed at preventing investors from attempting to profit from share price falls.
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Source: FT.com
Fear of SNB intervention weighs on franc
August 12, 2011--The Swiss franc endured a volatile week as the fall-out from the decision by rating agency Standard & Poor’s to downgrade US sovereign debt shook financial markets.
Haven demand for the Swissie accelerated early in the week, taking the currency up to record highs against the euro and the dollar.
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Source: FT.com
Short-selling restricted in four eurozone states
August 12, 2011-- The speculative practice of short-selling will be restricted from Friday in Belgium, France, Italy and Spain to combat "false rumours" that have destabilised the markets, European regulators said.
The European Securities and Markets Authority (ESMA) said in a statement that the four countries "will shortly announce new bans on short-selling or on short positions."
This was "to restrict the benefits that can be achieved from spreading false rumours or to achieve a regulatory level playing field, given the close inter-linkage between some EU markets."
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Source: EUbusiness
Bankhall members advised to shun synthetic ETFs
August 11, 2011--Sesame Bankhall has advised Bankhall members to avoid synthetic exchange traded funds, and urged them to recommend ETFs only from Sesame’s panel of approved funds.
In January, the network published a list of 19 ETFs which have been approved for Sesame members. It does not include any synthetic, or swap-based, ETFs. Bankhall members are not restricted to the panel but Sesame has recommended that they only choose ETFs from the panel to avoid exposure to overly complex ETFs.
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Source: Money Marketing
ESMA Promotes Harmonised Regulatory Action On Short-Selling In The EU
August 11, 2011--ESMA today published a statement on the harmonised action by national competent authorities on short-selling.
European financial markets have been very volatile over recent weeks. The developments have raised concerns for securities markets regulators across the European Union. ESMA has been actively monitoring the markets over the last few weeks and has been exchanging information with national competent authorities on the functioning of the markets and the market infrastructure.
In the area of short-selling regulation, many authorities already have either requirements for the disclo-sure of net short positions and/or bans of certain types of short sales in place . Recent developments have meant that all competent authorities have reinforced the monitoring of their markets and are keeping their regulatory requirements under review. ESMA has coordinated discussions between the national competent authorities, specifically on the content and timing of any possible additional measures necessary to maintain orderly markets.
view statement-ESMA promotes harmonised regulatory action on short-selling in the EU
Source: ESMA
European quartet bans short-selling on financials
August 11, 2011--France, Spain, Belgium and Italy have all banned short-selling of financial stocks in a bid to calm banking share prices. However, the quartet have failed to persuade Germany and other European nations to support the move.
It follows a week when France's banks have been under heavy attack with its largest institutions Societe Generale and BNP Paribas falling as much as 20% within trading sessions as rumours above solvency and liquidity spooked investors.
The short-selling ban will run for 15 days and will only increase the number of parallels drawn by investors with the days leading up to the credit crunch of 2008.
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Source: Citywire.co.uk
Europe Curbs Short-Selling in Financial Stocks; Move Questioned
A ban on short-selling financial stocks in four European countries including France takes effect on Friday, a coordinated attempt to restore confidence in markets hit by rumours and higher borrowing costs.
France, Italy, Spain and Belgium imposed the ban, which will vary in detail depending on the country, the European Securities and Markets Authority (EMSA) said in a statement late on Thursday.
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Source: Reuters
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