EUROPE: Four markets take measures to prohibit Europe short selling

Friday August 12 2011

Following on from Greece`s prohibition of Europe short selling effective 9 August, and given recent volatility on European financial markets in recent weeks, four authorities, Italy, Spain, Belgium and France, have decided to impose or extend existing Europe short-selling bans in their respective countries 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.

These measures have been aligned as far as possible in the absence of a common EU legal frame-work in the area of Europe short-selling and given the very different national legal bases on which such measures can be taken. In addition, ESMA has emphasised the requirements in the Market Abuse Directive referring to the prohibition of the dissemination of information which gives, or is likely to give, false or misleading signals as to financial instruments, including the dissemination of rumours and false or misleading news.

European competent authorities will take a firm stance against any behaviour that breaches these requirements and ESMA will support national authorities to act swiftly against any such behaviour which is clearly punishable. While Europe short-selling can be a valid trading strategy, when used in combination with spreading false market rumours this is clearly abusive.

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