Germany Ban’s “Naked” Short Selling |
| Germany’s BaFin financial services regulator said it will temporary ban naked short selling and naked credit default swaps of euro area government bonds starting immediately. The ban will also apply to naked short selling in shares of some banks and insurers that will last until March 31 2011. Short selling involves the sale of borrowed securities in the hope of profiting by buying them later at a lower price and returning them to the owner. When securities are sold “naked”, the assets are not borrowed they are simply sold. BaFin said it was taking the step to reduce volatility and the amount of short selling “could endanger the stability of the entire financial system.” Similar measures were introduced during the Global Financial Crisis. |
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