Quote
Four EU nations ban short-selling on banking stocks
12 August 11 00:05
France, Italy, Spain and Belgium have banned short-selling on the shares of banks and other financial companies.
It follows sharp gains and losses in bank stocks in recent days, especially in France, on fears about their exposure to eurozone government debt.
Societe Generale has been the worst affected by the volatility, being forced on Wednesday to deny that its financial stability was at risk.
Short-selling is when traders profit from bets on the fall in a share price.
It has been blamed for increasing recent market instability.
Short-sellers usually borrow shares or bonds, sell them, then buy them back when the stock falls - pocketing the difference.
"Naked" short-selling is when a trader sells financial instruments he has not yet borrowed.
All forms of short-selling are included in the ban.
'Irrational fears'
The announcement was made both by the European Union's markets supervisor, ESMA, and the four national markets authorities.
France's agency, the AMF, said it was banning short-selling on 11 banking and insurance stocks for 15 days, including France's three largest banks, Societe Generale, BNP Paribas and Credit Agricole.
In Thursday trading on Societe Generale's share price started up 8%, before falling by the same amount, and then recovering to finish 3% higher.
Societe Generale chief executive Frederic Oudea said the speculation about his bank was "absolutely rubbish".
Mr Oudea also spoke to France Info radio. "People are scared," he said, "so the tiniest information touches off irrational fears. To our clients, we have to tell them that these rumours are baseless and that they can have confidence in Societe Generale."
Spain's market regulator, the CNMV, also said its ban would be in place for 15 days. It added that it could also extend the period if required.
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Rest of report here:
http://www.bbc.co.uk/news/mobile/business-14500731 (http://www.bbc.co.uk/news/mobile/business-14500731)
I heard about this but I don't know what it actually means.
Cramer thinks the temp short sale ban are a good idea. He also likes Alcoa. Then he played a sound effect of a hippo farting.
Quote from: Ed Anger on August 11, 2011, 09:16:22 PM
Cramer thinks the temp short sale ban are a good idea. He also likes Alcoa. Then he played a sound effect of a hippo farting.
I think he's more opposed to naked short selling. Which you have to admit, is pretty risque.
I liked when I read somewhere that they are doing this to "calm the markets" I am sure they will feel very calm after their normal modus operandi is stomped upon by state decree.
The EU has been debating banning short selling for a while now, so I don't see how this is an evidence of "panic". I guess these countries have just done it because so far no agreement has been reached at the EU level to do so.
Quote from: Martinus on August 12, 2011, 01:55:10 AM
The EU has been debating banning short selling for a while now, so I don't see how this is an evidence of "panic". I guess these countries have just done it because so far no agreement has been reached at the EU level to do so.
I don't really get it though. So now, those who want to bet against the euro economy, will "short" euro through currency pairs.
Quote from: Tamas on August 12, 2011, 02:01:41 AM
Quote from: Martinus on August 12, 2011, 01:55:10 AM
The EU has been debating banning short selling for a while now, so I don't see how this is an evidence of "panic". I guess these countries have just done it because so far no agreement has been reached at the EU level to do so.
I don't really get it though. So now, those who want to bet against the euro economy, will "short" euro through currency pairs.
If that's the outcome, then so much the better. Europe could use some Euro devaluation.
Quote from: Martinus on August 12, 2011, 02:05:13 AMEurope could use some Euro devaluation.
Why? Most of the imbalances in the Euro area are internal, not external. And devalue against what? The dollar? That's pretty hard considering as the US also devalues at the moment.
Quote from: Martinus on August 12, 2011, 02:05:13 AM
If that's the outcome, then so much the better. Europe could use some Euro devaluation.
Don't worry, it's coming.
Quote
PARIS (AP) — France's economic engine sputtered to a halt in the spring as French consumers slashed their spending and exports dried up.
The French economy posted zero growth in the second quarter, national statistics agency INSEE said Friday. Government economists had forecast growth of around 0.2 percent in the period.
Growth in the first quarter was nearly 1 percent, but the a sudden reversal in consumer spending and stagnation by the country's exporters has caused the seizing up of the eurozone's second biggest economy.
The report Friday follows two days of frantic efforts by French officials to soothe investors' nerves after suggestions that the country could be the next major economy to lose its coveted triple-A credit rating.
France's finance minister took to the airwaves again Friday morning in a bid to put a positive spin on the weak second-quarter numbers.
"It's not a surprise that the second quarter is worse than the first, we anticipated this," Francois Baroin said in an interview on French radio station RTL. He said the government is sticking with its deficit reduction targets despite the lower growth.
The French central bank said this week that the economy will likely grow only 0.2 percent in the third quarter. The bank's monthly industrial survey showed corporate order books and factory utilization rates falling for the second month in a row in July.
Quote from: Zanza on August 12, 2011, 02:51:13 AM
Quote from: Martinus on August 12, 2011, 02:05:13 AMEurope could use some Euro devaluation.
Why? Most of the imbalances in the Euro area are internal, not external. And devalue against what? The dollar? That's pretty hard considering as the US also devalues at the moment.
Euro devaluation would help the struggling economies/budgets like Greece or Portugal. The ones that can afford it, like Germany (I presume) could raise the wages.
Quote from: citizen k on August 12, 2011, 02:54:45 AM
Quote from: Martinus on August 12, 2011, 02:05:13 AM
If that's the outcome, then so much the better. Europe could use some Euro devaluation.
Don't worry, it's coming.
What is?
I read the article header as "4 EU nations ban short-shorts on banking staff".
Which would have been a more interesting article, probably.
I think Martinus is right on the euro devaluation, but the short selling bans are silly. Blaming short sellers is just what people do when prices fall. Remember when the short sellers were responsible for the declines of Countrywide, then Bear Stearns, then AIG, etc? We put short selling bans in place and launched investigations into how speculators tanking our "sound" financial institutions. They are just a convenient scapegoat.
Better to ban algo traderbots who spam one cent quote prints all day long.
I don't know about devaluation, but stagnation in France means over a third of ECB "shares" are owned by countries in desperate need of low interest rates. Any guesses on whether this will finally change their inflation fetish?