European Short Selling Restrictions

Market regulators in Belgium, France, Italy and Spain have placed temporary restrictions on new covered short sales for a specific list of financial stocks. We have conducted the following historical analysis:

- Data Explorers data shows that the average % of stock on loan for the named stocks is below the market average in each country with the exception of Italy. This has been the case throughout 2011

- The average in Italy is skewed by the very large loan outstanding for Banca Popolare di Milano - in place since March and partially driven by its potential rights issue. Excluding this bank, the average across the Italian financial stocks falls to 1.4%, marginally above the market average for Italy

- The data also show that the % of shares in lending programs for these financial stocks is also below the market average, again with the exception of Italy. This suggests low institutional ownership of these stocks.

- (We have filtered out dividend related borrowing, which accounts for the spike in demand to borrow in May)

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Independent academic research into the effect of the short selling bans in the aftermath of the Lehman default can be found on our Research & Academic portal. Click here to download Alessandro Beber’s paper - Short-Selling Bans around the World: Evidence from the 2007-09 Crisis