France, Italy, Belgium and Spain are alone among European countries spooked by market activity this week to have introduced the short-selling of financial stocks for the next 15 days starting from this morning’s market openings.
But rather than them being a co-ordinated, harmonised ban, France’s actions only cover the shorting of bank equities.
Crédit Agricole and BNP Paribas have seen their share price fall dramatically in the past few weeks, though the market has far bigger concerns over the recent heavy fall in Société Générale’s share price. It has seen close to a 50% drop since the start of July, to leave it trading at €23 today. This is far from a new story though, as its share price has steadily fallen from €140 in Q2 2007 to as low as €20 in March 2009. Yesterday the bank was forced to issue a denial of “all market rumours”.
The perception of these French banks was not helped by further rumour that France was going to lose its AAA credit rating, something each of the major rating agencies denied.
The European Securities and Markets Authority made similar warnings when it reminded players about the Market Abuse Directive about “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.
“While short-selling can be a valid trading strategy, when used in combination with spreading false market rumours this is clearly abusive.”
The regulatory bodies in the UK and US have both said they have no intention of introducing a similar ban.
