European hedge fund and trading groups call for short selling ban to be lifted

[Sergey Golubev]

European hedge fund and trading groups call for short selling ban to be lifted

Europe’s trading and hedge fund firms are calling for a removal of the temporary short selling bans issued in several countries from March, in response to the market volatility triggered by the coronavirus pandemic.

The trade bodies calling for the repeal represent hundreds of top firms — including the likes of Citco, Man Group, State Street, Guotai Junan Securities, Citadel Securities Europe, Bridgewater Associates and Marshall Wace — who say a removal of the ban is crucial to improving market efficiency and preventing further damage to investor portfolios as a result of the pandemic.

Their plea comes after the European Securities and Markets Authority said on 15 April that the short-selling ban would remain across Austria, Belgium, France, Greece and Spain until 18 May, with the possibility of a further extension.

The bans were first rolled out in Italy, Greece, France, Belgium, Austria and Spain following extreme market turbulence in March, as investors tried to price in the expected downturn triggered by country-wide lockdowns. Italy has said its ban will remain until 18 June.

In a 13 May letter to the finance ministries of the EU countries that introduced the ban, the four groups urged finance ministers to “to lift those restrictions and enable the market to function in a way that best serves the needs of investors”.

The groups include the Alternative Investment Management Association, which has 2,000 members in over 60 countries; the FIA European Principal Traders Association; the Managed Funds Association, whose members manage over a third of global hedge fund assets; and the World Federation of Exchanges, whose members include the major trading platforms around the world.

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