Short selling bans extended last night in four eurozone equities markets – Spain, Italy, Belgium and France - have not completely stopped shares sliding today, but falls by mid-morning were generally modest compared to some already experienced this month.
By 0945 France's Cac 40 was down 0.76%; Spain's Ibex 35 index was 0.34% lower; Italy's FTSE Italia All Share was down 0.34% and Belgium's Bel 20 benchmark was 0.8% lower.
After markets closed yesterday regulators in all four countries announced an extension of their various bans for short selling, the placing of bets that securities' prices will fall.
Spain and Italy extended their vetoes to 30 September, while France's ban on shorting 10 financial shares will end on 11 November at the latest. Belgium's moratorium was also extended.
A ban in Greece continues and will be assessed by Athens before it is scheduled to expire on 7 October.
Shorting is a practice most widely used by hedge funds, and one that some regulators feel can be used in conjunction with disseminating malicious information about a market or stock, to cause its value to fall.
Some academics, and hedge fund trade body the Alternative Investment Management Association, have vigorously contested any assertion shorting on its own can undermine prices.
When the eurozone's four nations introduced their bans this month, Aima CEO Andrew Baker said: "We do not think these bans will help the current market situation. 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.
"Short-selling is a legitimate market practice which helps capital markets function effectively. It was only last year that the Committee of European Securities Regulators, the predecessor to ESMA, recognised in an official report that ‘legitimate short selling plays an important role in financial markets...contributes to efficient price discovery, increases market liquidity, facilitates hedging and other risk management activities and can possibly help mitigate market bubbles'."
Aima has noted it is fully behind stopping traders distributing malevolent material, or unfounded rumours, in bids to send prices down.
Aima's Baker said: "Market abuse is illegal and has always been condemned by our industry. If there is any proof of market abuse having taken place then the authorities should take appropriate action against the perpetrators. If there is any suggestion of market abuse, however, then it may be appropriate to take more targeted action, rather than impose blanket bans."
In mid-August France's watchdog, the Autorité des Marchés Financiers, issued a statement reminding investors "the dissemination of unsubstantiated information may lead to sanctions".
It said it had noted "the regular functioning of the markets is disrupted by the dissemination of unfounded rumours regarding financial assets listed in Paris. The AMF points out that in accordance with its general regulation, the dissemination of unsubstantiated information, and the act of profiting from such information, may be treated as a breach leading to sanctions."
More recently the AMF seemed to suggest the four eurozone countries may act in concert when removing their respective bans, saying the AMF aims to "lift the ban as soon as market conditions allow it and, to the extent possible, in a coordinated way."
Investors fearing a similar ban in Germany, and potential downgrade of the country by ratings agencies yesterday, sold the Dax down sharply yesterday, although it rallied to end just 1.7% lower, after no moratorium came from BaFin nor downgrade from ratings firms.
The Dax was 1.47% lower this morning.
A selection of key moments caught on camera from InvestmentEurope's recent Pension Fund Forum in Zurich have been published.
A selection of key moments caught on camera from InvestmentEurope's recent Fund Selector Forum in Geneva have been published.