Monday, 28 July 2014
Last updated 15 sec ago
Aug 12 2011 | 12:08pm ET
Hedge funds were critical of the short-selling ban imposed by four European countries yesterday.
Belgium, France, Italy and Spain all temporarily barred short sales of financial stocks in an effort to tamp down on market volatility. "They have done so either to restrict the benefits that can be achieved from spreading false rumors or to achieve a regulatory level playing field, given the close interlinkage between some EU markets," the European Securities and Markets Authority said.
The Alternative Investment Management Association isn't buying that argument, however. The industry lobby, as it did in the face of similar restrictions three years ago, complained that "past experience has show that bans on short-selling do not prevent market falls and indeed can exacerbate volatility."
"We do not think these bans will help the current market situation," CEO Andrew Baker said.
Baker's concerns were echoed by Crossbridge Capital's Manish Singh, who acknowledged that the ban would create a short-term rally—as it has—but warned that "the authorities can ban short-selling, but they can't ban the spate of bad news on the economy from hitting the tape."
AIMA's Baker added that if European regulators are concerned about market abuse, they should go after the abusers.
"If there is any proof of market abuse having taken place then the authorities should take appropriate action against the perpetrators," he said. "If there is any suggestion of market abuse, however, then it may be appropriate to take more targeted action rather than impose blanket bans of this sort."
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…