GERMANY: BVI – No general pan-EU ban on short-selling

Tuesday March 24 2020

The German investment funds association BVI is firmly opposed to a general ban on short selling in the EU as currently demanded by some regulators and market participants. ‘A general pan-EU ban on short-selling for securities traded in the EU only makes sense selectively for certain companies and sectors and even then its effectiveness is doubtful,’ says BVI CEO Thomas Richter. Already today, national supervisory authorities could issue temporary short selling bans in individual cases if they consider market integrity or market confidence to be threatened. But the current fall in stock market prices has fundamental causes. ‘Covered short selling is not speculation,’ emphasizes Richter.

As a precautionary measure, the European Securities and Markets Authority ESMA had lowered the reporting thresholds for the mandatory reporting of short selling positions on Monday. Investors must now report net short positions to their national supervisory authorities from 0.1 percent instead of the previous 0.2 percent. ‘This is a suitable measure for regulators to get an overview at European level and, if necessary, to take further steps,’ said Richter. Temporary interventions in the market would have to suffice. ‘Instead of a general pan-EU ban on short selling, it would be better at present if ESMA were to ensure that the national go-it-alones were harmonised,’ Richter continued.

This week, the French regulator AMF issued a short selling ban on all shares traded in Paris and extended it to one month on Wednesday. Belgium, Spain and Austria also has a one-month ban on short selling, while in Italy the ban applies for three months.