Move on speculative trade

Greece’s capital market regulator and bourse authorities yesterday swung into action to restrict liquidity and raise the costs of speculative trading as the Athens stock market posted yet another grim performance. Responding to a call from the Capital Market Commission, the Athens Stock Exchange and derivatives clearing house ADECH said the costs of borrowing securities for short selling of reverse stock repos went up by 1 percentage point effective yesterday. The percentage of securities that ADECH will hold in reserve also increased by 10 percent yesterday. Collateral margins on the six stock futures traded at the Athens Derivatives Market (ADEX) are due to go up today. Under the new rules, the margins will increase by 3 percentage points to 15 percent, while margins for reverse stock repos will rise by 5 percentage points to 130 percent. ADEX offers futures and stock repos in National Bank of Greece, telecoms operator OTE, Coca-Cola Hellenic Bottling, Vodafone-Panafon, Alpha Bank and Intracom. The Union of Greek Institutional Investors yesterday also refuted press reports that mutual funds and closed-end investment funds had dabbled in short selling, saying that legislation and community directives prohibited such actions. Investors, however, were not reassured by the measures as the market fell to a new year-low. The benchmark share index plunged 2.63 percent to close at 1,745.26 points. The sell-off hit National Bank, Alpha Bank and OTE hard. The government last week labeled the prolonged mass sell-offs as an inverted bubble. Athens, however, was not the only market on the slide. London, Paris and Frankfurt also suffered declines as discouraging US corporate news and possible war took their toll on investors.