France follows others in banning short selling

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France follows other countries such as the United Kingdom, Spain and Italy in banning speculation on a fall of a share price, the so-called short selling. On Tuesday, investors should not go short on 92 shares, French regulator Autorité des Marchés Financiers (AMF) announced.

The AMF is forced to take this emergency measure after sharp price falls in the stock markets. Due to fears for the new coronavirus, the stock markets have been falling sharply lately. Speculating on further price falls can certainly cause even more uncertainty. Investors who go short sell shares they borrowed from the owner. They then hope for a loss of price to buy back the shares cheaply and earn the profit.

Such a ban is not yet in force in the Netherlands. The last time a ban on shortselling was imposed in the Netherlands was during the financial crisis in 2008.

European stock market regulators lowered the threshold of the reporting obligation for short sell positions on Monday. This makes it easier to monitor how many investors are speculating on a fall in share prices.

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