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FOUR EUROPEAN NATIONS BAN SHORTSELLING

From : Radhakrishnan M at 09:47 PM - Aug 12, 2011 ( )

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NEW YORK(CNNMoney) -- Regulators imposed a temporary short-selling ban in four European nations, effective Friday, in order to tame the wild market volatility that has taken markets throughout the world on a roller coaster ride.

The European Securities and Markets Authority, which is the European version of the Securities and Exchange Commission, saidFrance,Italy,SpainandBelgiumhave all "decided to impose or extend existing short-selling bans in their respective countries." 

"They have done so either to restrict the benefits that can be achieved from spreading false rumors or to achieve a regulatory level playing field, given the close interlinkage between some EU markets," the authority said in a statement.

 Short selling occurs when brokers borrow shares and sell them with an expectation of making money on the shares' decline in value.FranceandSpainannounced that their short-selling bans will last for 15 days, and could be extended, if deemed necessary. 

Jean-Paul Servais, chairman of the Financial Services and Markets Authority, which modifies the rules of short selling, said the ban was imposed "in the light of the high level of volatility that financial markets are currently seeing, and out of a concern for consistency with the actions of other regulators" in Europe. 

First Published: August 12, 2011: 7:47 AM ET

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