Greek securities watchdog bans short-selling until April 24


Greece’s securities regulator banned short-selling on the Athens stock exchange effective from Wednesday until April 24 to shield the equities market from volatility, after Greek shares lost nearly half their value this year due to the coronavirus crisis.

The Capital Markets Commission said it imposed the ban because the impact of the coronavirus epidemic is a “significant threat to market confidence”.

In short-selling, traders borrow a company stock with a view to selling it, hoping to buy it back later at a lower price and pocket the difference.

When the number of short-sellers outweighs those buying the stock, which could happen if investors rush to sell amid panic over coronavirus, that can further drive down the price of shares.

“The restriction is an appropriate measure to confront the threat … and does not have a negative effect on the market’s efficiency, disproportionate to its benefits,” the regulator said.

Greek stocks have been hit hard by the broader market selloff, down 46.8 percent year to date. The bourse’s banking index has lost 65.3 percent.

Many countries curbed short-selling in the aftermath of the 2008 financial crisis. While such bans can soften the impact of a shock, experts say they only work for a limited time and have little impact on the overall market.