In the wake of a massive market sell-off, several European securities regulators have banned short-selling in a list of hard-hit Spanish and Italian stocks.
Temporary prohibitions on short-selling were introduced by Spain’s Comisión Nacional del Mercado de Valores (CNMV) and Italy’s Commissione Nazionale per le Società e la Borsa, and echoed by the U.K.’s Financial Conduct Authority, amid concerns about “disorderly price movements” in European stock markets.
The CNMV said that it decided to ban short sales in liquid stocks that fell at least 10% on March 12, and illiquid stocks that dropped by over 20%.
“The decision has been adopted taking into account the evolution of securities markets in the context of the situation arisen as a result of the Covid-19 virus,” the CNMV said.
The regulator noted that a number of stocks “experienced extraordinary falls” and crossed the thresholds set out in the rules that allow them to restrict short selling in the face of significant price falls.
The ban covers 69 Spanish stocks and 85 Italian stocks.