Europe cracks down on short-selling, rumours

Updated: 2011-08-12 10:27


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Europe cracks down on short-selling, rumours
A man walks past a display board of a currency exchange office in Bucharest August 11, 2011. [Photo/Agencies]

PARIS - France, Italy, Spain and Belgium will ban the short-selling of stocks from Friday, European market regulator ESMA said on Thursday.

The European Securities and Markets Authority also said it will crack down on market participants who spread rumours and false or misleading news.

The regulator said the EU's Market Abuse Directive prohibits the dissemination of information which gives misleading signals about financial instruments and that European authorities will take a firm stance against any abuse.

"ESMA will support national authorities to act swiftly against any such behaviour which is clearly punishable," ESMA said.

It added that while short-selling can be a valid trading strategy, it is clearly abusive when used in combination with spreading false market rumours.

The announcement comes after European bank shares have been battered this week, in a sell-off partly sparked by a series of rumours about the solidity of banks and the credit rating of sovereign debt.

French market regulator AMF said it would ban short-selling of financial shares for a 15-day period effective immediately.

The shares include major banks BNP Paribas, Societe Generale, Credit Agricole and Natixis, and leading insurer AXA.

Other shares affected by the ban are those of April Group, CIC, CNP Assurances, Euler Hermes, Paris Re and Scor.

Belgium and Spain also announced bans short-selling.

ESMA said the four countries that have decided to impose or extend existing short-selling bans and have done so 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 framework in the area of short-selling and given the very different national legal bases on which such measures can be taken," ESMA said.


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