France, Italy, Spain and Belgium have banned all short selling of financial stocks for 15 days in response to sharp share price falls this week, but they failed to convince other regulators to go along with a European Union-wide prohibition.
The bans on the controversial practice where investors aim to profit from price falls will take effect on Friday morning. But other main markets, including the US and the UK, have said they have no plans to follow suit.
Jean-Pierre Jouyet, head of the AMF, the French securities regulator, said on Thursday night: “They wanted to test French resistance. This is our response, as always very determined, and it will be so for all those who want to put us to the test.” The announcement represents a partial victory for the new European Union market regulator, ESMA, which has sought to avoid a repeat of the uncoordinated actions that swept around the world after the 2008 collapse of Lehman Brothers. Greece and Turkey had already imposed restrictions on short selling earlier this week.
EU regulators said they were acting to “restrict the benefits that can be achieved from spreading false rumours” at a time when volatile markets have unnerved many investors. Rumours that the French government was facing an imminent credit rating downgrade have been denied by rating agencies and the government.
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