Spain bans short selling for a monthTweet
Rodrigo Orihuela brings some much welcome good news from Spain:
Spain’s securities regulator banned short selling for a month in an attempt to shield local stocks from the volatility caused by the coronavirus outbreak.Bloomberg
Makes sense that they don’t want opportunists trying to make money off this emergency. When that happens, you have people with perverse incentives to stroke panic and spread fear, at a time when people are already very fearful.
The ban starts March 17 and can be extended for additional periods no exceeding three months.Bloomberg
Mark your calendars for St. Patrick’s Day. Italy and France had also enacted a one day ban on March 13:
Spain, as well as Italy, had already ordered a one day ban on short selling in the March 13 sessions. Spain’s benchmark Ibex index dropped to its lowest intra-day level since March 2003 during Monday’s session, before closing at the lowest since 2012.Bloomberg
Should the United States follow the lead of securities regulators in Europe? Or is short selling important for healthy market function? Let us know what you think.