Spain and Italy ban short-selling

Spain and Italy have banned short-selling of stocks, amid growing fears that the two economies will need a sovereign bailout from other eurozone members.

CNMV, Spain’s stock market regulator, confirmed the short selling ban of all stocks will last for three months.

The preventive ban affects any trade on equities or indices, including cash equities transactions, derivatives in regulated markets or OTC derivatives that could create a net short position or increasing a previous one, even on an intraday basis, but does not cover market making activities.

Meanwhile, Italy’s Consob announced a one week short selling ban, introduced on selected banking and insurance shares.

“European securities markets are going through a period of extreme volatility which might cause their disorderly functioning and affect to the normal development of financial activity. In these conditions it is necessary to review the operation of securities markets in order to ensure financial stability,” CNMV said in a statement.

The decision takes into account similar actions of the Italian supervisory authority, it added.

The yield on Spain’s 10-year bonds reached today a new high of 7.56%, while the Italian primary country yield reached 6.36%.

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