Austrian FMA prohibits short selling
23 March 2020 Austria
Image: Shutterstock
Austrian financial markets regulator (FMA) has joined its counterparts in France, Italy, Greece, Spain and Belgium in banning short selling to shield local equities markets from further coronavirus-fuelled market disruption.
The one-month ban began on 18 March after Austrian shares dropped their value by almost half and applies to shares listed on the Vienna Stock Exchange.
“Speculative short selling may lead to significant risks in the currently exceptionally volatile global and Austrian market environment,” says the FMA’s executive directors, Helmut Ettl and Eduard Müller in a joint statement. “In the difficult situation caused by the economic impact of the COVID-19 virus pandemic, the stability of the financial markets and maintaining the confidence of investors in the orderly functioning of the markets must have absolute priority.”
The FMA has followed the now established trend of EU market regulators opting for a one-month short selling ban. So far, only Italy has gone further with a three-month ban.
ESMA came out in favour of the several bans last week and said the lockdowns were necessary to avoid undue downward pressure on equities markets.
The FMA outlined that its preference was for an EU-wide and harmonised measure coordinated by ESMA, however, due to member states and their financial markets being affected by the coronavirus by differing extents an it was not possible to reach an agreement.
The dim view taking of short selling by some European regulators is contrasted by those of the UK and Germany, which have both ruled out imposing a ban.
Meanwhile, calls for an EU-wide ban by the FMA and others have prompted a backlash from industry bodies including the German investment funds association BVI, which argues that the effectiveness of such a move is “doubtful”.
The one-month ban began on 18 March after Austrian shares dropped their value by almost half and applies to shares listed on the Vienna Stock Exchange.
“Speculative short selling may lead to significant risks in the currently exceptionally volatile global and Austrian market environment,” says the FMA’s executive directors, Helmut Ettl and Eduard Müller in a joint statement. “In the difficult situation caused by the economic impact of the COVID-19 virus pandemic, the stability of the financial markets and maintaining the confidence of investors in the orderly functioning of the markets must have absolute priority.”
The FMA has followed the now established trend of EU market regulators opting for a one-month short selling ban. So far, only Italy has gone further with a three-month ban.
ESMA came out in favour of the several bans last week and said the lockdowns were necessary to avoid undue downward pressure on equities markets.
The FMA outlined that its preference was for an EU-wide and harmonised measure coordinated by ESMA, however, due to member states and their financial markets being affected by the coronavirus by differing extents an it was not possible to reach an agreement.
The dim view taking of short selling by some European regulators is contrasted by those of the UK and Germany, which have both ruled out imposing a ban.
Meanwhile, calls for an EU-wide ban by the FMA and others have prompted a backlash from industry bodies including the German investment funds association BVI, which argues that the effectiveness of such a move is “doubtful”.
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German industry body fires back against calls for EU-wide short selling ban
German industry body fires back against calls for EU-wide short selling ban
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