Temporary short-selling bans imposed earlier this month by the financial market authorities in France, Italy, Belgium and Spain have been broadly criticised by both the Alternative Investment Management Association and the EDHEC-Risk Institute.
The bans, on specific banks and financial stocks, were imposed on 11 August following several days of high volatility in the sector.
“We do not think these bans will help the current market situation,” said a statement by AIMA CEO Andrew Baker. “Past experience has shown that bans on short selling do not prevent market falls and indeed can exacerbate volatility. Independent academic research also supports this conclusion.”
Baker went on to describe short-selling as “a legitimate market...