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Spain’s regulator the CNMV has decided to extend a ban on short selling for an additional week and has submitted a proposal to the European Securities and Markets Authority (ESMA) to impose a further three month ban, effective from 1 November 2012.
The additional seven-day ban is an extension of the CNMV’s previous three month ban, which it introduced on 23 July to stabilise the volatility of the Spanish market.
Spain’s short selling extension is in part due to the ongoing structuring process of the Spanish financial sector to cover capital needs.
The process, which was outlined in the 23 July Memorandum of Understanding (MoU) between the European Commission, the Kingdom of Spain and the Bank of Spain, has not yet concluded, and a range of uncertainties could still affect Spanish financial stability.
“Raising the ban on short sales would heighten uncertainty through its likely impact on the market. Conclusion of this process is considered to be absolutely necessary to ensure the stability of the financial system and the Spanish capital market.”
“Moreover, a number of events or circumstances that led to the adoption of the July decision and which may threaten the integrity of the Spanish financial markets are currently persisting,” said a statement from the regulator.
Italian regulator Consob lifted Italy’s short selling ban, which was also introduced in July, on September 14.
On 24 July, Greece’s Capital Market Commission extended its short-selling ban, which has been in place since August 2011, to 31 October 2012.
