Instinet, Credit Suisse Studies: Shorting Bans Do Little to Help Europe’s Banks

Bloomberg reports (“Shorting Bans Do Little to Help Europe Banks, Instinet Says,” October 3, 2011) that “financial stocks subject to rules restricting short sales in France, Italy, Belgium and Spain have behaved about the same as banks in European countries with no such prohibitions, according to Instinet Inc.”

“The study says prohibiting bearish bets did little to stem volatility or reverse losses after concern about the European debt crisis sent banks in the Stoxx Europe 600 down more than 30 percent from their February highs. France banned short sales in companies such as Societe Generale (GLE) SA and BNP Paribas SA, and Italy’s rules covered almost 30 companies such as UniCredit SpA.

Another report on the short-sale ban from Credit Suisse Group AG said “banned financial stocks fell 10.4 percent from Aug. 12 to Sept. 20, while German, Dutch and British constituents of the MSCI Europe Financials Index declined 4.4 percent. The study, published today, says the rules didn’t stop share price declines in affected European stocks. Analysts Mark Buchanan, Jonathan Tse and Drew Vincent, based in London, wrote the report.”

Leave a Reply