Spanish regulator bans short selling amid coronavirus driven sell-off
13 March 2020 Madrid
Image: Shutterstock
The Comisión Nacional del Mercado de Valores (CNMV), the Spainish market regulator, has imposed a one-day ban on short selling of 69 Spanish stocks aimed at maintaining market stability following several major price drops.
The ban is in effect for Friday’s trading sessions and applies to all liquid shares admitted to trading on the Spanish stock exchanges whose price has fell by more than 10 percent yesterday.
It also covers all illiquid shares whose price has fallen more than 20 percent on Thursday.
The list affects a wide variety of sectors including, banking, real estate, automotive, entertainment, aviation and more.
The country’s airlines, in particular, were hit hard on Thursday after US President Donald Trump caused panic among investors by announcing that America would close its borders to all incoming flights from the EU as of next week.
Many airlines across the EU suffered a double-digit fall in share price as a result of the president’s statement on Wednesday evening which had not been communicated to EU governments ahead of time. At the time of writing, the sector has recouped some of these loses.
The CNMV says the decision has been adopted “taking into account the evolution of securities markets in the context of the situation arisen as a result of the COVID-19,” the disease caused by the fast-spreading novel coronavirus.
European share prices have experienced extraordinary falls, including a 14.06 percent decline in the case of IBEX 35, and a significant number of shares have crossed the thresholds set out in the EU Short Selling Rules (SSR) and its delegated act, says CNMV.
As a result, the regulator says it is taking steps to mitigate the risk of disorderly price movements in European stock markets, including the Spanish one.
Market making activities, as defined in article 2.1.k of the SSR are exempted from the regulator’s order.
The CNMV is only the latest regulator to impose a short selling ban in an attempt to restore to stability to markets that have been sent reeling in recent weeks as the virus continued to rampage around the world world.
More than 100,000 are known to be infected with the virus worldwide, with Spain among the worst affected countries in Europe.
The ban is in effect for Friday’s trading sessions and applies to all liquid shares admitted to trading on the Spanish stock exchanges whose price has fell by more than 10 percent yesterday.
It also covers all illiquid shares whose price has fallen more than 20 percent on Thursday.
The list affects a wide variety of sectors including, banking, real estate, automotive, entertainment, aviation and more.
The country’s airlines, in particular, were hit hard on Thursday after US President Donald Trump caused panic among investors by announcing that America would close its borders to all incoming flights from the EU as of next week.
Many airlines across the EU suffered a double-digit fall in share price as a result of the president’s statement on Wednesday evening which had not been communicated to EU governments ahead of time. At the time of writing, the sector has recouped some of these loses.
The CNMV says the decision has been adopted “taking into account the evolution of securities markets in the context of the situation arisen as a result of the COVID-19,” the disease caused by the fast-spreading novel coronavirus.
European share prices have experienced extraordinary falls, including a 14.06 percent decline in the case of IBEX 35, and a significant number of shares have crossed the thresholds set out in the EU Short Selling Rules (SSR) and its delegated act, says CNMV.
As a result, the regulator says it is taking steps to mitigate the risk of disorderly price movements in European stock markets, including the Spanish one.
Market making activities, as defined in article 2.1.k of the SSR are exempted from the regulator’s order.
The CNMV is only the latest regulator to impose a short selling ban in an attempt to restore to stability to markets that have been sent reeling in recent weeks as the virus continued to rampage around the world world.
More than 100,000 are known to be infected with the virus worldwide, with Spain among the worst affected countries in Europe.
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