UPDATE 1-Greek regulator to extend short-selling ban - source

Wed Oct 24, 2012 5:08am EDT

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ATHENS Oct 24 (Reuters) - Greece's securities regulator is expected to extend a short-selling ban on the Athens stock exchange when the restriction expires on Oct. 31, a source close to the capital markets commission told Reuters on Wednesday.

Short selling involves investors borrowing shares to sell on the market and later buying them back at a lower price to make a profit.

The securities watchdog applied the restriction in August last year to brake a stock market plunge that was triggered by the country's debt crisis. Since then it has extended the ban four times.

"They will most likely extend the ban when the board meets tomorrow," the source said, adding new procedures that go into effect on Nov. 1 require the European Securities and Markets Association (ESMA) also to give an opinion on the matter.

ESMA is an independent authority tasked with safeguarding the stability of the European Union's financial system by ensuring the orderly functioning of securities markets. It fosters supervisory convergence among securities regulators.

"Continuing uncertainty, including the long delay in disbursing Greece's next tranche of bailout aid and banks' recapitalisation will weigh on the board's decision on Thursday," the source said.

Greek shares have rebounded strongly since the June election that formed a coalition government, with the Athens bourse's benchmark index gaining 47 percent.

Spain moved to extend its ban on short selling last week. (Reporting by George Georgiopoulos; Editing by Mark Potter)

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