Greek regulator bans short-selling for 2 months

 
City A.M. Reporter
Short-selling will be banned on the Athens bourse for two months starting tomorrow, Greece's financial regulator has said, in an effort to stem a stockmarket slump.

It is the third time since the eruption of the global economic crisis in 2008 that Greece has prevented short-term bets against its stocks as the debt-laden country struggles to avoid default.

The Athens bourse index has closed down six per cent at a fresh 14-year low, a fall nearly twice as steep as that of European peers, after the US credit rating downgrade and on concerns over the impact of an upcoming bond swap on Greek banks.

"The board of the capital market commission, after considering the urgent circumstances on the Greek market, has decided to ban short selling in listed stocks on the Athens bourse," the capital market commission said.

The watchdog announced the measure after the Athens general index dropped below the psychologically important 1,000 points level. Greek PM George Papandreou has repeatedly blamed speculators for exacerbating his country's woes.

"The ban will be implemented tomorrow August 9 and for two months," the regulator said.

Greece imposed its first short-selling ban from October 2008 to June 2009. The second lasted for four months and was lifted in Sept 2010, after Greece received its first EU/IMF bailout.

Analysts said the move could help reduce volatility in a market hit hard by the debt crisis. "It was a necessary decision in a very difficult environment on the Greek stock market," said Costas Boukas, head of asset management at Beta Securities.

"This decision will help the market by separating 'real investors' from speculators that invest short-term," he said.