ESMA Extends Short Selling Ban on Greek Equity Markets

An official announcement made by the European Securities and Markets Authority (ESMA ESMA European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t Read this Term) has confirmed that the short selling ban implemented in Greece as the country introduced capital controls, will remain in place for another week.

The prohibition of short selling activities were imposed on the 30th of June by the Hellenic Capital Market Commission (HMCM). The measure is aimed at reducing the speculative pressure on local indices and to reduce Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad Read this Term of the stock market. This is the second extension of the short sale ban last week after the HMCM extended the initial term by one week.

Similar measures are typically taken in periods of extreme market volatility. Back in 2008, a number of stock markets across the globe were hit by a similar ban, whilst the European sovereign debt crisis escalation in 2011 triggered a series of short sale bans, especially in the financial sector.

In 2008, fearing that selling stocks short was driving increased market turmoil, U.S. regulators officially forbade short selling of financial stocks. A research study by the New York Fed reveals that the effects of the suspension were muted.

In fact, in the aftermath of the ban of short selling, financial stocks tumbled and only stabilized after the ban was lifted.

The New York Fed’s study has found that on a number of occasions, stocks which were subjected to short selling restrictions underperform against the unrestricted shares.

The new extension to the ban is set to start at 00:00:01 hours (CET) on July 14, 2015 and will remain active until 24:00:00 (CET) on July 20th, 2015.